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Johannesburg - Two retailers separately wrote off consumer debt totalling over R1bn in the six months through December, underscoring a squeeze on shoppers brought on by rising interest rates, inflation and high unemployment.
JD Group [JSE:JDG], a credit-based furniture retailer, wrote off more than R500m, nearly triple the level six months earlier, as it swung to a first-half loss and suspended its dividends.
Separately, the country's biggest listed clothing retailer Truworths [JSE:TRU] wrote off R647m of consumer debt, up nearly 50%.
Retailers in Africa's biggest economy are among the local market's biggest declining stocks of the past 12 months, amid fears about the impact on consumer spending of tentative economic growth, rising fuel prices and high household debt.
Consumer inflation accelerated to a higher-than-forecast 5.8% last month, raising expectations of a further interest rate hike and heightening concerns that debt-laden borrowers would struggle to keep up with loan repayments.
Nearly a quarter of South Africans have no job in an economy where average household debt accounts for 75% of disposable income.
More to come
"South Africa is a tough place to be for retailers," said Roger Tejwani, an analyst at Johannesburg-based Noah Capital. "Also real wage growth is slowing and we've seen the first rise in interest rates in six years and there's probably more on the way."
JD Group reported a headline loss per share of 59.1 cents in the six months to December 31, against earnings of 234.4 cents a year earlier. Headline EPS, South Africa's main profit gauge, strips out certain one-off and non-trading items.
The company said it would not pay a first-half dividend because of the poor performance.
Truworths, which sells about three quarters of its products on credit, barely grew earnings during the same period, citing high default rates among its customers. Headline earnings per share (HEPS) increased 1.4% to 335.8 cents and the company said it would raise its dividend 6% to 216 cents per share.
In response to slowing growth at home, domestic retailers are increasingly looking to the rest of Africa for returns, but their expansion has been slow due to a lack of shopping malls and a weak supply chain infrastructure.
Upscale grocer and clothing retailer Woolworths quit Nigeria late last year, citing high rents and duties as well as the difficulties of marketing to consumers in Africa's most populous country.
JD Group officials declined to give details of any prospective expansion into the rest of Africa, but its majority shareholder Steinhoff has said it plans to use the firm to expand in the continent and other emerging markets.
Cape Town-based Truworths said it would increase trading space by 10 percent but did not specify how much of that would be outside South Africa.
Truworths shares edged up 1% to R68.20 by 14:49 GMT, having slumped last week to a three-year low of R64.86. JD was up 1.4% at R25.40, up from a near six-year low of R22.85 seen earlier this month.
Both stocks are down about 12% so far this year against a slight gain in the JSE All-share index.
JD Group [JSE:JDG], a credit-based furniture retailer, wrote off more than R500m, nearly triple the level six months earlier, as it swung to a first-half loss and suspended its dividends.
Separately, the country's biggest listed clothing retailer Truworths [JSE:TRU] wrote off R647m of consumer debt, up nearly 50%.
Retailers in Africa's biggest economy are among the local market's biggest declining stocks of the past 12 months, amid fears about the impact on consumer spending of tentative economic growth, rising fuel prices and high household debt.
Consumer inflation accelerated to a higher-than-forecast 5.8% last month, raising expectations of a further interest rate hike and heightening concerns that debt-laden borrowers would struggle to keep up with loan repayments.
Nearly a quarter of South Africans have no job in an economy where average household debt accounts for 75% of disposable income.
More to come
"South Africa is a tough place to be for retailers," said Roger Tejwani, an analyst at Johannesburg-based Noah Capital. "Also real wage growth is slowing and we've seen the first rise in interest rates in six years and there's probably more on the way."
JD Group reported a headline loss per share of 59.1 cents in the six months to December 31, against earnings of 234.4 cents a year earlier. Headline EPS, South Africa's main profit gauge, strips out certain one-off and non-trading items.
The company said it would not pay a first-half dividend because of the poor performance.
Truworths, which sells about three quarters of its products on credit, barely grew earnings during the same period, citing high default rates among its customers. Headline earnings per share (HEPS) increased 1.4% to 335.8 cents and the company said it would raise its dividend 6% to 216 cents per share.
In response to slowing growth at home, domestic retailers are increasingly looking to the rest of Africa for returns, but their expansion has been slow due to a lack of shopping malls and a weak supply chain infrastructure.
Upscale grocer and clothing retailer Woolworths quit Nigeria late last year, citing high rents and duties as well as the difficulties of marketing to consumers in Africa's most populous country.
JD Group officials declined to give details of any prospective expansion into the rest of Africa, but its majority shareholder Steinhoff has said it plans to use the firm to expand in the continent and other emerging markets.
Cape Town-based Truworths said it would increase trading space by 10 percent but did not specify how much of that would be outside South Africa.
Truworths shares edged up 1% to R68.20 by 14:49 GMT, having slumped last week to a three-year low of R64.86. JD was up 1.4% at R25.40, up from a near six-year low of R22.85 seen earlier this month.
Both stocks are down about 12% so far this year against a slight gain in the JSE All-share index.
