Discretionary spending on clothing and lifestyle items are usually the first to fall victim to a slowing economy, as retailers have found out in the past two years.

Gym memberships and sports memberships are often casualties, as people choose to walk their dogs instead.

And yet, contrary to this impression, Holdsport — which owns Sportsmans Warehouse and outdoor specialist Outdoor Warehouse — seems to be keeping its head above water.

Sales rose 5.8% for the year to February, even though net profit fell 11.4% to R273.7m. But more importantly, the company is banking on things improving — planning to open three new stores this year, to take its total to 66.

Sportsmans Warehouse, which accounts for more than 70% of revenue, has opened new outlets in the Mall of Africa and Menlyn Park shopping centre in Gauteng.

But top-notch as operators such as Holdsport might be, some sectors just aren’t going to give you much value right now.

Analysts at Momentum SP Reid say that Holdsport "remains a quality offering", while "at current valuations the stock remains one of the cheaper plays in the multidepartment retail sector — but we believe this is with good reason".

This sentiment is probably why its share has inched down 4.7% over the past year, though it is up 34% over the past three years — far better performance than the 8.8% gain on the JSE all share.

For the brave investor, however, Holdsport might still be a solid long-term bet.

Analysts at consultancy EY say some retail sectors defy economic slowdowns. Speciality retailers such as Holdsport provided the strongest returns last year with a 51.6% return on equity, while grocery retailers averaged 22.3%. Clothing chipped in a decent 41.1% return, according to EY.

Cobus Loubser, Holdsport’s CFO, says that while specialist retailers might be faring better than their grocery and fashion counterparts, consumer sentiment is still all-important.

Loubser says even his more affluent customers have been hurt by rising inflation, higher taxes and a low-growth environment.

"The prevailing political and economic environment has made consumers hesitant to spend. I think households have lost a bit of confidence and have struggled to maintain their standard of living in the past year or so," says Loubser.

He seems well aware that Holdsport’s performance, while reasonable, was far from a thumping success. "We would have wanted to do better, but I suppose that’s life," says Loubser.

Still, as an incentive for investors, Loubser says the group managed to reward investors with inflation-beating 10% dividend growth. Though it’s a nice sweetener, the fact remains that there’s unlikely to be a sharp recovery in consumer sentiment in the next few months.

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