Retailers Mr Price and Woolworths were given a boost this week when sector companion Truworths released an impressive trading update.
Former “blue chip” counter (current midcap stock) Truworths announced that retail sales for the first 18 trading weeks, of the 2016 financial year, increased by 19% (vs prior year’s 18 week comparative) to R4.4 billion, as cash sales grew by 25% and credit sales by 17%. The news has lifted short term sentiment around the health of the consumer and in turn improving the retail sectors near term outlook.
Despite a brief reprise in the resource sector, following Chinese Premiere Li Keqiang’s comments, that the China had capacity to maintain economic growth above 6.5%, gains were short lived as the prospect of a nearing U.S. rate hike emerged as the prominent market theme once again.
Shares Bhp Billiton, AngloGold Ashanti and Anglo American Platinum found themselves at the forefront of decline in lieu of the aforementioned market theme which equated to further dollar strength and commodity price weakness.
Luxury goods maker Richemont saw a negative reaction to its results, which although robust, fell short of analyst estimates and where the market’s pricing of the share. Some of the salient features of the interim results were as follows:
- Sales increased by 15 % to EUR 5 821 million; a 3 % increase at constant exchange rates
- Strong sales through Maisons’ own boutiques offset mixed wholesale sales, which were particularly weak in the Asia Pacific region
- Operating profit increased by 6 % to EUR 1 390 million
- Operating margin was resilient at 24 %
- Profit for the period increased by 22 % to EUR 1 103 million
- Solid cash flow from operations of EUR 1 055 million