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Morning Market Scoop 18 January 2019

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Barry Dumas
Moring-market-scoop

Morning Market Scoop 18 January 2019

In our morning market scoop:

  • South African Retail Sector - In a turn of events both Woolworths and Mr Price caused Billions of Rands to be wiped off the market after sales numbers were released.

Share down Mr Price and Woolworths

Source: Business Insider South Africa

“Re-Tailed Down”

What’s the scoop? Retail Sector Gets Smacked

Just as market participants though the most exciting thing for the day was the interest rate decision on Thursday were unpleasantly surprised.

  • In a turn of events both Woolworths and Mr Price caused Billions of Rands to be wiped off the market after sales numbers were released.

THE BIG PICTURE – Mr Price lead the pack as the retailer’s earnings release was a huge disappointment. The retailer released its third quarter sales update ending December 2018, sales only grew by 1.9% (YoY) with a negative outlook for the fourth quarter. The black Friday and festive season sales which all retailers bargained on did not help.

  • The stock plummeted over 13% at the start of the trading session on Thursday and closed even lower at 16.69%.

Woolworths was not spared any pain as it reported its sales fell by 2% while Woolies Foods sales rose by 6.3% which is significantly lower than the 9% from a year earlier. The news sent market participants into a frenzy as Woolworths lost over R5 Billion in market cap after the release.

  • Woolies share price also fell making it the second biggest loser of the day and closed lower by 9.98%.

The retail sector is starting to experience the after effects of the petrol price increases as well as the VAT increase filtering through to the South African economy.

Retail sector closing prices:

  • Mr Price Group Ltd (MRP): -16.69%
  • Woolworths Holdings Ltd (WHL): --9.98%
  • Truworths International Ltd (TRU): -9.41%
  • The Spar Group Ltd: -4.38%
  • Clicks Group Ltd (CLS): -4.28%
  • Foschini Group Ltd (TFG): +3.24%

What does all this mean for me?

  • We might expect more pressure on the economy in the short term as the corporate earnings trickle in.
P.S The interest rate was left unchanged in case you missed it!
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