Neither a 200 basis-point hike in interest rates nor the rand weakening to R8 per dollar will affect South African clothing retailer Edgars Consolidated Stores Limited’s (Edcon) growth, Tessa Christelis, executive manager of investor relations at Edcon, told reporters on Tuesday.
“The economy and consequently the consumer is doing far better than reflected in official statistics. Our actual sales growth has exceeded internal forecasts by some 10%, showing that we are getting it right in terms of merchandise mix, but also that there is plenty of consumer buying power out there.
“Although overall sales grew by 25%, our bad regions increased by 15% and our good regions by 40%,” Christelis said.
On July 14, Edcon CEO Steve Ross said total sales for the first 14 weeks of this financial year have exceeded internal targets and rose by 25% when compared with the same period last year.
This compared with Retailer Liaison Committee (RLC) clothing, textile and footwear sales growth of 21% year-on-year (y/y) over the same period.
Mid-market clothing retailer Edgars’s sales increased by 24% y/y, while low-income clothing retailer Jet’s sales were up 28% y/y, with these chains representing 90% of group sales.
“Investors overseas are concerned about the impact of the rand and interest rates on our sales growth. Our analysis is that unless interest rates rise by more than 200 basis points or the rand goes above R8 per dollar, there will be no material impact on our growth,” Christelis said.
“The healthy state of consumer finances is reflected in the fact that bad debts that we wrote off a few years ago are now being repaid as consumers have more money. Despite our very cautious credit vetting procedures we still added 100 000 to our credit-card members in the past quarter, which now exceed three million.
“Our collections are running at over 100% of instalments due as customers pay off their debt early,” Christelis concluded. — I-Net Bridge