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Comfort buying all the rage
September 10, 2009

By Florence de Vries

In the midst of a recession, clothing firms have stood out head and shoulders above the rest of the retail sector, fuelling debate about the psychology behind sartorial indulgences when times are tough.

Since its makeover, women’s clothing stores within the Foschini group – two years in the marking – are paying off handsomely for the company.

Speaking at the group’s annual general meeting yesterday, Foschini chief executive Doug Murray told shareholders that the ladies’ wear stores, which contribute roughly 30 percent to group turnover, had previously underperformed but that there were some strong results coming through.

Foschini has been repositioned to raise levels of fashionability and quality to be more desirable to its clientele. Only marginal improvements could be seen in the numbers, but Murray said the first five months of this financial year showed “exceptionally strong evidence of a turnaround”.

In the year to February, the star performer in the Foschini stable was the Fashion Express division. Where Foschini stores’ turnover grew 1.2 percent, Fashion Express doubled on that with turnover growth of 5.4 percent, further evidence customers were “buying down”.

“Retailers in other sectors are really struggling where clothing retailers have stood out and are doing rather well,” said Mark Ansley, an equity analyst at Cadiz Asset Management.

Competitor Truworths continued to impress retail analysts in the year to June with sales of merchandise at Truworths, the parent firm of Identity, Uzzi and YDE stores, growing by 11 percent to R6.2 billion.

Overall clothing and general goods showed a slight increase of 0.4 percent in the year to June at Woolworths, while the lower price tags at Mr Price fuelled total sales to grow by 11.9 percent over the 18 weeks to August 1.

“Other (non-clothing) retailers are scratching their heads, but it appears that in a recession, clothing purchases tend to be psychological,” Ansley said. He said the consumer seemed to be feeling pain in so many areas and that clothing had become a “throwaway indulgence”.

“It’s not going to break the bank to treat oneself to an item of clothing.”

Ansley added that the Foschini group was a “volatile player” whose performance varied from year to year.

“But the group does appear to have turned the corner and delivered on the repositioning of the brand.”

Similiarly, Woolworths had battled in the past two years to get its fashionability on par, and chief executive Simon Susman had acknowledged this. Woolworths would continue to focus on “basics” and not necessarily “fashionable” items in the current financial year.

Meanwhile, retail giant Edcon reported slower sales growth for the quarter to June compared with the previous year, but managed to maintain its market share in the clothing retail industry.

Foschini shares added 1.2 percent yesterday to R59.10.