Outlook narrow even as sales up at lifestyle retailer Foschini

31 Aug '06

3 min read

Lifestyle products company Foschini Limited reports that continuing strong consumer spending has pushed Foschini Group (FOS) sales ahead of budget for the first five months of its new financial year and the company is cautiously optimistic about the outlook for the remainder of the year, Foschini Group Chairman Eliot Osrin told the Annual General Meeting in Parow.

Foschini's total sales for the five months to end August grew by 17.5 percent over those of the previous year, said Osrin, while sales in comparative stores increased by 10.8 percent y/y. At 36.3 percent y/y, homeware posted the fastest growth, due largely to new store openings and its relatively low base. Clothing sales grew 15.6 percent, jewellery sales were up by 15.7 percent, cosmetics sales were 21.8 percent higher.

Commenting on prospects for the second half of the financial year, Osrin said: "Whilst the continued low inflation and relatively low interest rate environment, together with the favourable economy, continue to benefit consumer confidence, there is early evidence that the credit cycle may be entering a new phase where conditions may not be as favourable as they have been in recent years. Interest rates have now started to rise, albeit from a very low base, and consumer spending, while still buoyant, may not be as strong in the second half of the year."

Despite the expected slight deterioration in conditions for the coming months, the Chairman said that in the absence of unforeseen circumstances and though mindful of recent financial market turbulence, the company remained confident about its trading and expected to produce another year of good growth.

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