If your friends hold a lot of consumer stocks, check on them and make sure they’re okay. The sector has been obliterated this year, with numerous fresh 52-week lows last week. There seems to be a severe loss of confidence in the outlook for South African consumers.
Google’s AI overview function will tell you that the world is not in fact in a global recession. But it will mention a bunch of risks like geopolitical conflicts, energy supply shocks and rising inflation.
It’s a difficult time in the world, with the US 10-year treasury yield crossing the 5% threshold for the first time since 2007 (just before bankers broke the world in the global financial crisis). The headlines coming out of the US aren’t pretty at all, with treasury secretary Scott Bessent taking an increasingly antagonistic stance regarding the market and Federal Reserve chair Kevin Warsh — particularly in the wake of the Fed’s decision to hike rates by 25 basis points. That may not sound like much to South Africans, who are accustomed to structurally high rates, but a move from 3.75% to 4% is meaningful.
With Brent crude trading above $100 a barrel at the time of writing, inflation risks are running red hot. And though a small degree of inflation can help retailers with like-for-like sales growth, too much of it can negatively affect volumes and crush margins.
The pain is widespread in the sector. It’s not as simple as pointing to the consumer discretionary names or to the retailers that have been disrupted by competition.
For example, Woolworths recently hit a 52-week low that is 42% below the 52-week high reached in January. That’s a nasty sell-off for one of the country’s favourite retail brands, particularly among higher-LSM shoppers. Woolworths is leaning into that brand positioning under the new leadership of Sam Ngumeni, with a plan to focus on Woolworths food and the beauty and home elements of the fashion, beauty and home division as adjacent categories. The fashion business is at risk of becoming less important over time.
There’s nothing wrong with that strategy. If anything, it’s a sensible approach to focusing on areas where the group can win. But the market isn’t interested in taking risks right now, so Woolworths is being punished by the overall risk-off approach.
With consumers shopping down in search of value offerings, you would be forgiven for thinking that Pepkor is a safer bet. But the value retail giant has been hammered as well, with a recent 52-week low that is down nearly 39% from the 52-week high in December 2025.
This is despite a recent voluntary trading update that noted positive headline earnings growth for the year at the midpoint of guidance, a decent outcome for a year that featured extensive investment in the PlusB bank project and a challenging base thanks to the timing of two-pot retirement withdrawals.
If investors are unwilling to back a fresh strategy at Woolworths and a resilient set of numbers at Pepkor, a weak name like Truworths stands little chance. It reported a fresh 52-week low, is at present trading on an earnings multiple below six and the market’s growth expectations for it are very low. Even for a “cheap” stock, multiple compression has been evident.
Beyond clothing
If we move on from clothing, we will find traditionally defensive names that also look as if they’ve gone a few rounds with Mike Tyson.
The tide went out for the Clicks valuation in late 2025 after the company had been a market darling and a popular choice for foreign investments for many years. The recent 52-week low is a whopping 52.5% off the 52-week high in October 2025. Now on an earnings multiple of just 13.5, Clicks looks like a relative bargain versus arch-rival Dis-Chem, which is trading at 23. There are some important differences in the business models of the two groups, but it feels that at least one of those valuations is wrong.
Elsewhere in the consumer value chain, Tiger Brands and AVI both reached new 52-week lows as well. Even the strongest brands on the shelf at your local grocery store haven’t been spared by the market.
Boulevard of Broken Dreams is an old song by Green Day. Wake Me Up When September Ends is another, written about childhood trauma rather than the 9/11 attacks, despite popular belief. And unless we see a serious shift in momentum on the JSE, it could become an anthem for holders of local consumer stocks as well.
