South Africa: Retail Bounces Up - but Don't Get Excited

analysis

Despite a recent bounce in retail share prices, South Africa's economic fundamentals do not bode well for a recovery in the sector.

Amid a sea of red, Clicks' share price surged by 13% this week after the pharmacy retailer advised the market that its results could rise by as much as 18%, better than its previous set of (good) results and ahead of market expectations.

Happily, other retailers seemed to follow suit, with rival Dis-Chem rising 5.4%, though most of Dis-Chem's gains have reversed.

Unfortunately for those looking for green shoots, Clicks and to some extent Dis-Chem are considered outliers rather than front runners in the retail space.

"Yes, Clicks' numbers are phenomenal," says Kayalethu Nodada, an analyst with Old Mutual Investment Group.

"They have performed well over time and keep pumping out double-digit growth, but I was surprised by how much the price responded."

The fact that the rest of the sector also appeared to bounce upwards means little.

"There are no signs of a protracted recovery and we cannot confidently say we have seen the bottom," he says.

Source: Business Maverick analysis

In fact, if the numbers are anything to go by, life is likely to get more...

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