Retailers limping as investors look for further equity sell-offs
Local retail stocks are tracking the mood on global markets, giving back some of Monday’s 4% surge as risk-off sentiment returns
The biggest one-day gains for the JSE’s general retail index in seven months on Monday could be short lived. General retailers, which include the likes of TFG and Mr Price, began the week cheering some positive news, including further Chinese economic stimulus, but analysts caution the same factors that led the index to lose 12% so far in 2018 remain. The risk-on trade that prevailed on the day evaporated shortly after local markets closed on Monday, while further data on Tuesday showing rising unemployment rates have underscored the extent to which consumer spending is under pressure.
Disposable income for most consumers is shrinking given increased VAT, fuel costs, rates and electricity, said Argon Asset Management’s Bjorn Samuels. “Given these headwinds, it is tough out there for retailers, especially those exposed to consumer discretionary spend, and we are already seeing multiple consensus earnings downgrades within the sector,” Samuels said. As SA retailers tend to be fa...