Offshore is in fashion in retail
It is little wonder that retailers are looking overseas, given the sluggish local economy
Perhaps feeling the grass is always greener on the other side, three large JSE-listed retail companies have set up shop offshore, with the UK and Australia proving to be the most popular investment destinations. All of their share prices have been downgraded and it might be time for investors to start shopping for longer-term value. Germien du Plessis, the finance principal of niche investment bank Bravura, says it is little wonder that retailers are looking offshore, given the sluggish local economy as well as the continuing rand volatility and the threat of a ratings downgrade. "Offshore acquisitions introduce hard-currency earnings to the income statement. A common theme is also that while Africa remains a great frontier which offers super-profits in some areas, the African expansion story is often fraught with regulatory and logistical difficulties. "We therefore see that the trend is set to continue for South African corporates to look to First World economies, including the UK...
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