Cape Town - Fashion retailer and distributor House of Busby has taken a calculated bet that the growing black middle class will continue to show a healthy appetite for international brands.
Last year, Busby, which already sells the up-market Samsonite luggage brand and operates 12 Nine West shoe stores, opened the first Mango store in the country in Sandton City, Johannesburg. Mango is a trendy Spanish retailer with almost 1 000 stores across the world.
Busby intends to open another three Mango stores this year and chief executive Keith Brouze reveals in the company's 2006 annual report that he hopes the chain will be profitable in its second or third year of operation.
While Busby has ventured into international brands, it also retains a focus on its trademark Busby leather goods, but has steered clear of retailing to the mass market.
Commenting in the annual report, acting chairman Steven Stein said the retailer had succeeded in increasing market share of international-branded business in South Africa.
But brand analyst Thebe Ikalafeng, the managing director of Brand Leadership Group, said he thought South Africans had a healthy appetite for both local and international brands. Ikalafeng said South Africa had "pretty much" caught up with the rest of the world with regard to international brands, following the country's integration into the world economy.
He said there was a growing appreciation of locally identified brands, such as boutique retailer Sun Goddess.
Brouze said that imported products were vulnerable to rand devaluations, but he argued that top-end customers' willingness to spend would not be overly affected.
Brouze believed interest rate rises would slow growth in the year to this June. In the year to June last year, net profit growth at Busby outperformed sales growth. Net profit was 39 percent higher at R45 million, while sales rose 23 percent to R693 million.
Stein also said that the purchase of a warehouse in Germiston would improve distribution efficiency and cut costs.
Brouze said the implementation of Chinese quotas "could have an adverse impact on the branded clothing side of the group", but he said this would not have a significant downside on the group as a whole.