Bloomberg News

Cashbuild Leads Plunge in Consumer Stocks: Johannesburg Mover

January 31, 2013

South Africa’s consumer stocks index fell to the lowest in 16 weeks as companies including building- materials distributor Cashbuild Ltd. (CSB) and Shoprite Holdings Ltd. (SHP), the country’s largest retailer, reported slowing sales growth.

The FTSE/JSE Africa General Retailers Index (JGENR) dropped as much as 2.6 percent and traded 0.9 percent down at 61,236.42 by 11:20 a.m. in Johannesburg. That’s the lowest since Oct. 11 and extends the gauge’s decline this year to 12 percent. Cashbuild slid 4.2 percent after slumping 7.9 percent yesterday. Shoprite retreated 2 percent while JD Group Ltd. (JDG), a furniture and appliance retailer, sank 2.5 percent.

Sales at stores open for more than a year were one percent lower in the three months through December than in the same period a year earlier, Cashbuild said yesterday, leading to its biggest share drop in four and a half years. Shoprite said December sales grew 11 percent versus a 16 percent gain in the corresponding month a year earlier in a Jan. 14 sales update.

“When stocks are trading on high multiples on peak earnings, which is the case for many of our retailers, they need continual positive news flow surprises to sustain those sort of multiples,” Jeanine Womersley, a retail analyst at Johannesburg-based Renaissance Capital, said by phone. “It’s possible that we see a pick-up in the short term, but in the medium term earnings estimates and valuations are still biased downwards.”

The retailers’ index trades on 18 times reported earnings against the 13.8 times earnings the benchmark FTSE/JSE All Share Africa Index trades on.

The retail gauge’s 30-day historical volatility, a measure of stock swings, was at 25 for a second day, from 21.76 on Jan. 29. The FTSE/JSE Africa All Share Index’s 30-day volatility gauge was at 8.75 from 8.74 previously. A higher reading means an asset price can have bigger moves.

To contact the reporters on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net;

To contact the editors responsible for this story: Vernon Wessels at vwessels@bloomberg.net


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