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Selling of retail stocks continues

31 Jan 2013 12:19
Retail stocks came under renewed heavy selling pressure on Wednesday (30 January)‚ with some analysts pointing to Cashbuild's trading update as the main trigger behind the sell-off.
The general retailers index fell to its lowest point in more than three months‚ with Mr Price and Truworths shedding more than 4% and 3% respectively while Cashbuild fell by over 9% after reporting slow revenue growth in its second quarter to December.

The drug retailers index‚ which includes Shoprite Holdings and Clicks‚ was down more than 3%.

"The (retail) sector still looks expensive. As far as I'm concerned there is still plenty of weakness ahead. Cashbuild trading update provides further proof that the sector is still over-priced‚" said Reuben Beelders‚ portfolio manager at Gryphon Asset Management.

Cashbuild's revenue in its second quarter to December was up 1% from a year earlier. In the past three years‚ revenue growth for the company has been above 8%.

Retail shares have been under constant pressure throughout this month following the release of their December quarter trading updates‚ which largely fell below market expectations.