Pick n Pain

Good Morning Voornaam,

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Burberry, not BlackBerry

Technological gimmicks come and go. Luxury goods groups don't. Steeped in tradition, most of them seem to make decent money over the long-term, although there's still room for significant underperformance and outperformance in the sector.

With Burberry releasing a sales update and Richemont taking a knock this week, Dominique Olivier and I took a look at the world of luxury and what it all means. As is always the case in Ghost Global, we leaned heavily on the excellent research library in Magic Markets Premium, something I'm very proud of.

Read the latest Ghost Global article here>>>

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Pick n Pain

You only need to ask around at the braai or look around you on the roads to notice the relative outperformance of Shoprite Check ers vs. Pick n Pay. The green scooters are everywhere and the performance of Checkers has even forced Woolworths Food to become more competitively priced over time, possibly helping to stem the tide of emigration. Not semigration, mind you, as we have plenty of Woolies stores in Cape Town.

Yes, Pick n Pay is a group in trouble. The performance in a chain like Boxer has flattered the group numbers, with the core Pick n Pay grocery business struggling to compete. This has become even more obvious in the latest numbers, where volumes are sharply down as Pick n Pay had to be less aggressive on pricing in order to protect margins.

This update is exactly why I remain bearish on South African retail overall, as I discussed in a recent CNBC interview.

Other important updates yesterday included detailed numbers from Accelerate Property Fund (where the distribution is a thing of the past and the balance sheet is going to cause some grey hairs for investors) and an acquisition by Super Group of a logistics company in the UK.

As always, I do the hard yards of reading SENS so that you don't have to. Get all the updates in just one click with Ghost Bites>>>

Range-bound trading for the rand

Ahead of the MPC meeting later today, the rand has hovered below the R18.00 handle. TreasuryONE notes that local inflation for June came in lower than market expectations, but this shouldn't have much effect on the expected 25 basis points hike by the SARB.

News headlines on Bloomberg confirmed that President Putin will not attend the BRICS conference in person, so that does take some geopolitical risk away from the rand. We can all be thankful for video calling as an alternative. The local currency didn't really respond to this news, but it does help limit the near-term risks.

Next week's FOMC meeting is likely to deliver the next round of news headlines for the dollar, providing us with a new direction in the currency space.

With that, I wish you a productive Thursday!

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