Brace for a bumpy ride ahead
Are Brait’s glory days gone?
Shareholders shouldn’t hold their breath waiting for a quick turnaround at problem child New Look
Investors who bought shares in Brait this time last year must be feeling particularly pained. On June 13, the day the company issued results for the year to March, the share price closed at an almost three-year low of R62.51 — more than 50% off the heady levels at which it was trading 12 months ago. It has recovered a bit since then, but not by much. So what gives? Are Brait’s glory days gone or can it do another Pepkor? (In that deal, incidentally, Brait sold Pepkor to Steinhoff at seven times its cost price, earning a cool R26bn return.) Unfortunately, New Look, the UK retailer for which Brait paid £763m in June 2015 (about R14.2bn at the time), remains a problem child. When it bought the asset, Brait valued it at about R15bn. This was then ratcheted up to nearly R35bn at the end of March 2016, a peak from which it has tumbled to R7.1bn as at March 31 this year — less than it originally paid. From accounting for 45% of Brait’s investment portfolio a year ago, New Look today makes ...
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