Stats SA said that the main contributors to the increase for the three months ended May were retailers in textiles, clothing, footwear and leather goods at 8.1% and contributing 1.6 percentage points.
Fashion retail group, Truworths International on Friday, 16 July, said that it expects a 10 - 13% rise in full year headline earning per share after implementing a 4% increase in prices and a 6% roll out of additional trading space.
In February, the retailer reported a 12% rise in sales to R4.03 billion in the half-year ended December but chief executive officer Michael Mark remained cautious and said that he expected the trading environment to remain challenging as the country emerged from the recession.
"We are not anticipating any marked improvement in consumer spending over the balance of the financial year," he said.
Earlier this year, Woolworths Holdings (WHL) reported a 38.3% increase in diluted headline earnings per share to 83.4 cents for the 26 weeks to 27 December 2009, group retail turnover grew by 9.3% for the 26 weeks, while comparable store sales growth for the same period was 4.4%. Clothing and general merchandise sales increased by 9.7%.
Though high debt, challenging financial conditions and unemployment are still weighing heavily on consumers, there seems to be an increase in discretionary spending.
A retail analyst says that while there is pressure on disposable income and unemployment will remain high, there has been growth in the retail sector.
"It is difficult to picture the retail sector returning to 2007 levels, but the worst is over, and consumers are starting to dip into their pockets," he says.
On Friday Truworths said that group retail sales for the period were R7.1 billion, 10.5% higher than the prior period, with credit sales contributing 70%.
The group added that its debtors' book continued to improve in accordance with management's expectations.
Though the outlook is positive for retail sales, analysts expect it to be a slow recovery.
"Retail sales are likely to continue expanding off a low base during the remainder of this year as consumer spending improves further on higher disposable income and low interest rates," said the Nedbank Group Economics unit.
Truworth's full year results will be announced on 19 August 2010.
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