In today's Taking Stock, Costco reported Q3 revenue of $61.96 billion, falling short of consensus expectations, despite robust 8% growth in same-store sales excluding fuel, driven by private label demand and consumer stockpiling.
Local Market Commentary
The JSE closed higher on Thursday, with the Top 40 index rising 0.94% to 87,054.6 points and the All Share index up 0.91% at 94,726.1 points. The gains were driven by a surprise 25 basis point interest rate cut by the South African Reserve Bank, signalling a shift towards a more accommodative monetary stance. All MPC members supported the move, lowering growth and inflation forecasts for 2025, and pointing to a neutral policy stance while urging structural reform to support long-term growth.
European Market Commentary
European equities edged lower with the STOXX 600 down 0.2% as early optimism over a temporary tariff reprieve faded. UK car production plunged in April amid weak exports and timing effects, while business confidence in services deteriorated sharply, underscoring rising cost pressures and economic fragility despite some easing in global trade tensions.
U.S. Market Commentary
U.S. stocks posted modest gains led by Nvidia’s strong earnings, though investor sentiment remained mixed after a federal appeals court reinstated key Trump-era tariffs. First-quarter GDP contracted by 0.2%, while Best Buy slumped on weaker forward guidance. Meanwhile, a rare meeting between President Trump and Fed Chair Powell highlighted renewed political pressure on monetary policy.
Asia Market Commentary
Asia-Pacific markets declined on Friday amid caution over U.S. economic signals, persistent inflation concerns, and geopolitical uncertainty surrounding U.S. trade actions. Japan's jobless rate held steady, while South Korea’s industrial output and retail sales underwhelmed, pointing to softening regional momentum despite some year-on-year gains in factory activity.
Currency Market Commentary
The rand firmed following SARB’s rate cut, supported by improved inflation expectations. The U.S. dollar extended its monthly decline amid tariff-related volatility and inflation uncertainty. Meanwhile, the Russian rouble surged to a two-year high as geopolitical tensions eased and markets welcomed a proposal for renewed peace talks with Kyiv.
Commodity Market Commentary
Gold prices dipped as the dollar firmed ahead of a key U.S. inflation release, while oil faced weekly losses exceeding 1% amid volatile tariff developments and speculation over a possible OPEC+ supply hike. Disputes over production quotas, particularly Kazakhstan’s stance, added further complexity ahead of the group's upcoming policy meeting.
Hosken Consolidated Investments Limited (HCI) +3.24%
HCI delivered a resilient result for the year to 31 March 2025, with HEPS up 3% to 1,499.5 cents and NAV per share climbing 29% to 30,318 cents. This came despite EBITDA falling 13% to R5.24 billion and net gaming win declining 4%. Performance was underpinned by solid contributions from hotels, branded products, and property, while reduced losses in oil and gas prospecting supported a 70% rise in the dividend to 170 cents. Revenue edged up 1% to R13.43 billion, reflecting underlying stability across its diverse investment base.
SPAR Group Limited (SPP) -3.86%
SPAR issued interim guidance flagging a HEPS decline of up to 10% from continuing operations, expected between 409.5 and 455.0 cents, down from a re-presented 455.0 cents. EPS is set to fall more sharply—down 5% to 15%—to a range of 375.7 to 419.9 cents. These results exclude discontinued Swiss and Polish operations, reflecting solely SPAR Southern Africa and Ireland. The update highlights ongoing margin pressure despite operational restructuring.
Lewis Group Limited (LEW) +5.73%
Lewis posted a 66.9% surge in operating profit to R1.2 billion for the year ended 31 March 2025, driven by 12.1% credit sales growth, gross margin expansion to 43.4%, and a 13.5% revenue increase. HEPS climbed 60.3% to 1,483 cents, with headline earnings up 53.5% to R768.2 million. A 66.7% hike in the final dividend lifted the annual payout to 800 cents. Improved collections and lower delinquencies led to a 2.6% reduction in debtor costs, despite a 14.5% larger book. Store growth (+49 net new locations), strength across segments, and continued investment in Real Beds supported results. ROE rose to 15.4%, exceeding target, aided by profitability gains and share buybacks. Management remains upbeat, targeting 40+ store openings in FY26.
Costco Wholesale Corporation (COST) -0.43%
Costco reported Q3 revenue of $61.96 billion, falling short of consensus expectations, despite robust 8% growth in same-store sales excluding fuel, driven by private label demand and consumer stockpiling. Management flagged tariff pressures and weak consumer sentiment as headwinds, prompting it to accelerate some imports and reroute others away from tariff-impacted regions. While maintaining competitive pricing remains a strategic priority, the company positioned price increases as a last resort, contrasting with peers like Walmart. EPS of $4.28 modestly beat forecasts, though macro challenges continue to weigh on profitability.
Dell Technologies Inc. (DELL) -0.12%
Dell upgraded its full-year profit outlook to $9.40 per share amid surging demand for its AI-optimised server offerings, which generated $12.1 billion in Q1 orders and expanded backlog to $14.4 billion. This follows the U.S. Department of Energy’s announcement of a new Dell- and Nvidia-powered supercomputer. Dell’s Q1 revenue of $23.38 billion edged past expectations, though EPS of $1.55 missed. Notably, its Infrastructure Solutions Group saw 12% revenue growth, underscoring momentum in enterprise IT spend, while the client PC division grew 5%. Q2 guidance also topped market estimates, reinforcing Dell’s positioning in the AI infrastructure space.
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