28 August 2007
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Johannesburg — WHILE retailers have been warning that consumer spend is set to slow, with growth next year expected to taper off a tad, two companies in the appliance import and manufacturing seem to be already feeling the pinch.
Amalgamated Appliance Holdings yesterday reported revenue declined 8%, while net profit plunged 42%.
The company ascribed this to a number of factors, including high inventory levels and sharp price increases from its logistics supplier.
It said sales of the traditional television had slowed and Christmas had not been the gift it had expected.
Competitors had been aggressively cutting prices, placing the embattled company under more pressure. And the changing tide was not just evident in the 2007 financial year, as Amap said it had been coming since the second half of last year.
Nu-World, which also sells appliances, last week said while turnover and earnings per share should be up 10%, a "poor last quarter and difficult trading conditions across all divisions, both locally and abroad, in addition to late delivery of a number of projects that will only materialise in the following financial year," headline earnings per share would fall 30%-35%.
One analyst said none of this made any sense. Massmart, which last week reported its results, and on-sells Amap's products, warned of a possible slowdown in consumer spending.
It did not, however, inform analysts that the past year was one of doom and gloom with sales down and the Christmas period not delivering good business.
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