Despite the increasingly tough conditions for already hard pressed consumers, Cape-based retailers appear to have come through the first half of 2015 in fairly good fettle. This is according to the various trading updates released recently as well as recent annual reports.

One common denominator is that most retail companies are remaining firmly on the front foot – either increasing retail space or investing in new innovations and trading platforms. This suggests some confidence that the respective retail offering from Cape-based retailers will hold up in tough trading conditions – especially with news (at the time of going to press) of another (small) interest rate hike and persistent talk of the VAT (value added tax) rate increasing next year.

Woolworths – a hybrid of grocery and fashion retailing, said sales had increased 55% for the 52 weeks of the 2015 financial year to end June. This figure, though, is misleading as it includes recently acquired Australian operation David Jones. If the David Jones contribution is stripped out, then group sales grew 12%. In a further breakdown, Woolies showed food sales increasing 13,5%, with a price movement of almost 8% and sales in comparable stores growing around 7%.

Retail space, including stores in the rest of Africa, grew 10% (net of closures and excluding franchise conversions.) Woolworths Clothing sales in South Africa increased 9,6% and by 4% in comparable stores. Retail space in the clothing segment – including stores in the rest of Africa – grew 7,1% (net of closures and excluding franchise conversions.) General merchandise sales increased by 7,7% and by 5,6% in comparable stores.

Woolies’ longer-term prospects appear still to be held in high regard by the market after the company’s accelerated book-build exercise – offering staff share incentive schemes for sale – was sold out in double quick time. Woolies advised last month that the book-build was “substantially oversubscribed” and just over 20 million shares were placed with qualifying institutional investors at a premium price.

Kenilworth-based supermarket giant Pick n Pay – which intends spending R5bn on stores and other activities in the next two years – appears to be shifting from a period of introspection into a period of growth. As at March this year Pick n Pay’s store portfolio comprised 1,189 stores and 2,2 million square metres of trading area.

CEO Richard Brasher said Pick n Pay opened 127 stores during the year across all Pick n Pay and Boxer formats – including 36 new supermarkets. With 14 under-performing stores closed, the 113 net new stores added 5,2% to total trading space.

He stressed, “We are determined only to grow new space where we are confident that doing so will deliver strong and sustainable returns.”

To this end, Brasher said the group had developed a plan for future space growth that took advantage of an improved operating model – including leveraging improved store efficiencies and an increasingly centralised supply chain. He explained that the lowered cost of operations enabled Pick n Pay to make more efficient use of existing space to the pool of potential sites for new stores.

Pick n Pay’s hypermarkets division might also play a key role in driving growth in the years ahead.

Brasher noted, “We have 20 Hypermarkets that contribute meaningfully to turnover and have embarked on a plan to modernise each of these for customers.”

He disclosed that four Hypermarkets had undergone refurbishment – adding that these were inevitably subject to a negative turnover impact during refurbishment, but showed strong sales growth and improved trading densities afterwards.

“As an example, our new and improved Brackenfell Hypermarket in the Western Cape has halved in size, now houses both the liquor store and pharmacy on-site, enjoys a refreshed range of clothing and general merchandise and delivers a significantly improved turnover per square metre at a materially reduced occupancy cost.”

Fashion retailer Truworths expected only a slender increase in profits of between 2% and 4% for the 52 weeks ending June 2015. Group retail sales should increase by 8,2% to R11,6bn compared to a 6,8% increase in the prior period. Most encouraging was that retail sales in the second half of the period increased 12% – which is markedly higher than the first half increase of 5,2%.

Truworths directors said that excluding the retail sales recorded by the recently acquired Cape Town-based retail boutiques Earthchild and Naartjie, group retail sales were up 7,2% to R11,5bn.

Credit sales comprised 70% of retail sales compared with 71% last year. Truworths directors said credit sales increased 10,6% in the second half and 5,4% in the first half. On a like-for-like basis, Truworths store retail sales increased only 4,2% in the second half of the period. Although slightly pedestrian, the second half growth is a marked improvement on the first half when sales decreased by 0,8%.

Still, Truworths reported that its trading space increased by 7,7% (6,1% last year) – which is a fairly confident investment considering the space growth excluded the space increase attributable to the recently acquired Earthchild and Naartjie.

Sportsware and outdoors equipment retailer Holdsport – which trades through the large Sportsmans Warehouse and Outdoor Warehouse outlets – looks up for a good profit game this year. CEO Kevin Hodgson said in his recent annual review that Holdsport was entering the new financial year in a very strong position. He pointed out that cash resources were substantial and the ongoing positive cash flow of the business remained a key strength.

“Even more important, our design and procurement skills are better than ever and bear the fruit of the significant steps taken to upgrade these over the past few years.”

Hodgson pointed out that the company had signed lease agreements for a further four new stores to be opened in the next financial year. There are also plans to relocate two stores. He disclosed that Holdsport’s time weighted trading space would increase by at least 6% for the next financial year – well above the cautious 2,1% seen in 2014.

Catalogue retailer HomeChoice is also investing heavily for future growth with plans to build a new 1,000-seater call centre at a cost of R110m adjacent to the company’s Cape Town head office. This new centre is aimed at servicing the call centre growth for the next ten years. Then HomeChoice will also invest around R65m in systems – including digital platforms, the ERP system, telephony and infrastructure investments.

HomeChouce directors also noted the “breadth and depth” of retail merchandise ranges would be expanded and extended into new categories. Interestingly, HomeChoice will also focus on developing a new ‘bricks and mortar retail store’ with the launch of its first large-format store in Cape Town.

Parow-headquartered Supermarket giant Shoprite reported it had increased total turnover by 11,2% to about R114bn in the 12 months to end June. CEO Whitey Basson growth on a like-for-like basis was 4,3%.

He said sales growth was especially strong in the first half of the year due to Shoprite having an extra trading day (remembering the company had stores closed last year for former struggle icon Nelson Mandela’s funeral in December 2013.)

Basson said the South African supermarket division grew sales by 10,5% – up from 8,7% in the 2014 financial year. “This is a strong performance considering the prevailing economic conditions and has led to further market share gains for the period.”

Basson said Shoprite’s furniture division – mainly the old OK furniture outlets – grew turnover by 13% despite the highly competitive market conditions persisting.