‘That extra bit’

Avien Pillay, Head of Research and Investor Services at Old Mutual Wealth.

Foreigners “take the reins” in SA retail.

Truworths is the fourth large retailer to employ a foreigner to lead the business. Clicks, Woolworths and Pick ‘n Pay are all run by foreigners. The Edcon group was actually one of the early pioneers who employed American retailer Steve Ross to turnaround the business thirteen years ago. After 23 years of leading Truworths, Michael Mark is retiring, but will remain on the board. French national Jean-Christophe Garbino will take over the leadership at Truworths. He previously headed Kiabi which has 450 stores across Europe and Russia. For a long time, Truworths occupied an unchallenged position in the premium fashion retail segment. This changed in the last five years with a number of international retailers (Zara, Topshop, Cotton-on, Gap and French Connection UK) entering SA. Truworths also had to contend with the likes of Mr Price and The Foschini Group given their focus on the affordable fashion segment. After a number of years of outperformance, Truworths has been underperforming over the last two years. Maybe a new international strategy is needed at Truworths!

US Wealth is outpacing income

The ratio of household wealth to income has hit a recent record. The last time the ratio was this high was during the great depression. The ratio came close to the Great depression level in 1999 (before the dotcom bubble) and in 2007 (before the housing bubble). The current ratio is 6.5 and for more than 100 years, it typically ranged between 4 and 5. Wealth has skyrocketed, driven mainly by rising stock markets and the ratio is calculated by dividing the nation’s net worth by income. Increasing wealth levels does not sound like an obvious problem, however it is a problem when the wealth is concentrated in the hands of a few.