Alarm bells in the unsecured lending sector rang out once again on Wednesday (12 February)‚ this time triggered by a 10% drop in furniture retailer
Similar sentiments were echoed by sector peer Lewis at the end of January‚ when it said that forthcoming sales would register a decline because of a 30% rise in debtor costs.
Although tighter credit controls were behind the lower sales reported by
Earnings were expected to be lower as a result of the ongoing challenges facing its customers‚ which included high indebtedness‚ rising food and transport costs‚ and slow income growth.
Sharp drop in share prices
"All the unsecured lenders are taking a beating. In 2007
Lewis‚ which is SA's single-largest furniture brand said in a trading update last month that labour instability across many sectors during the nine months to December had affected both the group's sales and collections.
Figures from the
Moreover, an 11-week strike at platinum miner Northam cost the company R200m in lost revenue‚ with workers estimated to have foregone R30m in wages.
"SA's top three platinum producers‚ Anglo American‚
Adding to the effects that strike action is having on consumers who fall in the lower income earning group‚ has been the slowdown in government wages and grants.
According to McCurrie the slump in retail share valuations has‚ however‚ not been limited to unsecured lenders. Those in the secured lending sector have also seen share prices fall by between 20% and 30%.
A weaker rand and rising commodity prices are providing a buffer for listed mining companies despite their direct exposure to the labour unrest in the sectors. They have been the biggest gainers on the JSE since the beginning of the year.
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