Stats SA: Idyllic picture of SA retail sales looks a bit funny
Divergence between official statistics and the utterly rotten numbers reported by JSE-listed companies
In the almost 40 years I have been analysing the SA retail sector, I cannot remember a time when so many JSE-listed retailers were exhibiting such poor results on such a sustained basis. Moreover, the prognosis is rather dismal, with little or no relief in sight in the languishing economy.
And yet, to look at the numbers reported in Stats SA’s latest monthly November 2018 publication on retail sales growth, you could be forgiven for thinking they were compiled in a different, far more buoyant economy.
Whatever the underlying reasons for the divergence, the Stats SA figures are now meaningless to the point of being misleading. This is a great pity, as these figures now no longer give analysts a feel for what is really happening in the listed retail arena.
The divergence between Stats SA figures and those from the JSE retailers are most revealing in the household furniture, appliances and equipment sector. For the whole of 2017 and 2018, Stats SA figures painted a relatively buoyant picture of sales growth in this category, with monthly real sales growth rarely if ever dipping below 10%.
Game and Dion within Massmart give an insight into sales within the electronic appliances industry and those have been very disappointing for quite some time now. Even with significant deflation in many of the categories that these stores sell, it is not enough to attract greater demand from cash-strapped consumers. So it really is a mystery as to where Stats SA gets such buoyant figures for this sector.
Almost as puzzling is the data for clothing, footwear, textiles and leather. According to Stats SA, only in September 2018 was there a very marginal dip in real retail sales growth in this sector. Other than that, growth in this sector averaged 2.6% for the six months from June to November 2018 in real terms. Add in notional inflation of, say, 5% and the result is just under 8% in nominal terms.
Yet Woolworths’ trading update for the six months to end December 2018 last week showed that local clothing sales declined by 2% in nominal terms and product inflation was 1.7%. Real growth was therefore largely static.
Even market darling Mr Price showed virtually static growth in its clothing sales in the three months to end December 2018, with its inflation averaging 5.9%.
Truworths managed a very pedestrian 2.4% growth in its SA operations for the six months to end December 2018. However, its product deflation averaged 1.5% during the period, suggesting that real retail sales growth was just under 4%.
Edcon, one of SA’s largest clothing retail chains, is seeing declines in sales as it actively closes trading space in its efforts to survive.
Only TFG managed to hold its head high with a very impressive 12.2% growth in clothing sales for the nine-month period to end December 2018, with merchandise deflation of 4%.
I am not inferring that StatsSA’s figures are necessarily wrong, but they no longer appear to be relevant from a holistic retail perspective in gaining an insight into local consumer spending at JSE-listed retail outlets.
Chris Gilmour is an investment analyst.