South African & East African Footwear and Leather Goods, Leather and PPE industry news.
Shoprite final results June 2019
Cape Town, W Cape, SA (August 20, 2019) – Sale of merchandise increased by 3.6% R150.4 billion (2018: R145.1 billion), gross profit grew 1.8% to R35.3 billion (2018: R34.7 billion) whilst operating profit was 8.2% lower at R6.9 billion (2018: R7.5 billion). Profit attributable to owners of the parent was recorded at R4.3 billion (2018: R5.2 billion). Furthermore, headline earnings per share decreased by 19.6% to R780.8 cents per share (2018: R971.4 cents per share).
Dividend number 141: The board has declared a final dividend of 163 cents (2018: 279 cents) per ordinary share, payable to shareholders on Monday, 9 September 2019. The dividend has been declared out of income reserves. This brings the total dividend for the year to 319 cents (2018: 484 cents) per ordinary share.
Group prospects and outlook: The Group will adopt IFRS 16: Leases effective from 1 July 2019. The expected impact is outlined in note 16 of the summary consolidated financial results included in this announcement.
With respect to Non-RSA, persistently challenging trading conditions in the year ahead are likely to hamper our ability to return to profitability. Angola is expected to be declassified from the list of hyperinflationary countries in the year ahead and, therefore, we anticipate that we will not be required to report in accordance with IAS 29 in the 2020 financial year. Post year-end, we have maintained our Supermarkets RSA sales momentum with Usave in particular reaping the benefits of our restored in stock position. Regarding the selling price inflation outlook for Supermarkets RSA, we’ve seen a slow increase in recent months to the 2.5% level currently.
We've entered 2020 bolstered by our success over the past six months with the knowledge that our continued operational focus will be combined with consolidating our financial position by reducing inventories, critically assessing capital expenditure and where appropriate, selling selected assets to redirect capital towards future growth projects. We are confident that following our system replacement, the Group is future fit and we look forward to achieving returns from a smarter Shoprite. The next few months will also see us operationalise key innovation projects that will unlock future alternative revenue streams and enhance our digital presence in the new race for reach.
Retail last week: Comment from 4 retailers on Saturday 17/08/2019
"Not good. We're normally busy for about 4 days a month - from the 30th, when people get paid, and the first weekend after the 30th - usually the Friday, Saturday, Sunday and Monday. The rest of the month is quiet, with upturns over weekends." - Suliman Hajat, manager, First Stop Store, Johannesburg, Gauteng, SA. Independent, 1 store, family outfitter.
"It's been very quiet. The month has been very quiet. I guess unemployment is the main problem." - N Harilal, proprietor, Fitwell Tailors & Outfitters, Newcastle, KZN, SA. Independent, 1 store, men's outfitter.
"A bit slow, and the month also. Certainly no fireworks. There's just a general slowdown. You can see there's less traffic as well. Malls would be busier because of convenience, and we had a second store in a mall, but we had to close it and move back to this store, where we've been for 61 years, because our father needed our help." - Rashe Daya, member, Florida Tailors, Johannesburg, Gauteng. Independent, 1 store, men's boutique.
"We've just switched over to spring/summer merchandise, so we've been on sale, and it's gone well because we're a destination store and we've got a following. In this environment, you've got to be on top of your game and offer something different. You can't just offer a lower price, because everyone's doing that. Our merchandise has a very European feel, and it's working for us. We've got a big following in Pretoria as well, and we're opening a second store - hopefully next weekend - in Menlyn Main Central Square. It's a fabulous store, very art deco." - Jianny Kechriotis, director, Freequency Footwear, Johannesburg, Gauteng, SA. Independent, 2 stores, predominantly women's boutique.
Export Charter: SAFLIA 'a key supporter'
The Southern African Footwear & Leather Industries Association (SAFLIA) was also a signatory to the export charter unveiled at the SA Footwear & Leather Export Council (SAFLEC) AGM in July.
In the report in the last S&V Footwear & Leather Goods Magazine, John Comley was listed as a signatory on behalf of the Footwear & Leather Industries Cluster (FLIC), "where he was in fact authorised by the SAFLIA Exco to sign on SAFLIA's behalf", SAFLIA executive director Jirka Vymetal said. Comley is a SAFLIA Exco member as well as chairman of FLIC. At the ceremony, Ernest Heunis, who is executive manager of FLIC and chairman of the Skins, Hides & Leather Council (SHALC), signed on behalf of FLIC and SHALC.
Reacting to the report, Vymetal said: "The only point we're making is that SAFLIA has always actively promoted exports and has been a key player in government assistance programmes which have made manufacturers more competitive. It is also the main sponsor of the Arsutoria trend and design courses held annually which are at least as beneficial for export ranges as they are for the domestic market. And when it comes to industry participation in negotiations between governments and trade blocs affecting exports, it is SAFLIA which represents the industry."
Truworths: Revenue up, profit down
Cape Town, W Cape, SA (August 15, 2019) – Revenue for the year increased by 1.7% to R19.6 billion (2018: R19.3 billion), gross profit was 1.7% higher at R9.3 billion (2018: R9.2 billion) whilst operating profit dropped by 58.1% to R1.7 billion (2018: R3.9 billion). Profit for the period attributable to equity holders of the company was recorded at R872 million (2018: R2.6 billion). Furthermore, headline earnings per share decreased by 8.6% to 562.8 cents per share (2018: 615.7 cents per share).
Final dividend: The directors of the company have resolved to declare a final gross cash dividend from retained earnings in respect of the 52-week period ended 30 June 2019 in the amount of 135 South African cents (2018: 159 South African cents) per ordinary share to shareholders reflected in the company's register on the record date, being Friday, 13 September 2019.
Company outlook Truworths Africa: Consumer spending in South Africa is expected to remain under pressure in the short term owing to the effects of the prolonged economic downturn and renewed demands on disposable income. The labour market continues to weaken with unemployment at a 15-year high level. However, consumer confidence has stabilised following the country’s national elections in May 2019 and the improvement in the power supply in recent months, while consumer inflation remains steady.
The stronger retail sales growth trend reported by Truworths in the second half of the 2019 financial period is promising and sales momentum is expected to be driven by the expanding e-commerce offering, the layby payment option and customer response to new store concepts, including ID Kids and Context.
Truworths’ medium-term prospects will be supported by the health of the account portfolio, continued investment for growth, robust cash flows and strong balance sheet. Truworths’ retail sales for the first six weeks of the 2020 reporting period increased 1.2% compared to the first six weeks of the prior period.
Office: Trading conditions and consumer confidence remain under intense pressure ahead of the end-October 2019 Brexit deadline, and it is expected that the retail sector will remain constrained in the medium term.
Management has over the past few months implemented several turnaround initiatives across the areas of trading (buying and planning), cost control, capital expenditure and brands and marketing and these are all progressing according to plan despite the difficult trading conditions. Inventory management remains a significant focus area to arrest gross profit margin decline and release working capital. Management is critically evaluating the real estate portfolio with a view to closing loss-making stores as leases come to an end. Based on an in-depth assessment by advisers, a major financial restructure of Office is not being contemplated given its current profitability, liquidity and cash position. Office’s retail sales for the first six weeks of the 2020 reporting period increased 3.0% in Sterling compared to the first six weeks of the prior period.
Group: Capital expenditure and trading space: Capital expenditure of R581 million (Truworths R537 million and Office GBP2.5 million) has been committed for the 2020 reporting period. Trading space is expected to increase by 0.6% (Truworths increase 0.7% and Office decrease 3.0%).
Choppies: Exiting SA
This is an extract from the report.
Johanesburg, Gauteng, SA (August 14, 2019) – Shareholders are referred to the various announcements regarding the delay in the publication of the Company's financial results for the year ended 30 June 2018 and the related cautionary statements, the last of which was published on 2 August 2019. This cautionary is separate from the last cautionary published on 2 August 2019.
Shareholders are advised that the board of directors of Choppies ("the Board") has completed a strategic review of its South African business. As a consequence, the board has concluded that exiting the South African market is the appropriate strategic decision for the Company.
Accordingly, Choppies has commenced a process which may result in the divestment of Choppies Supermarkets SA (Pty) Ltd. in whole or in part and which if successfully concluded, may have a material effect on the price of Choppies securities. The board informs stakeholders of the appointment of Redford Capital (also engaged as ‘Chief Restructuring Officer' of the Company), to the role of Sole Lead Co-ordinator and Advisor on behalf of Choppies in respect of advising on and executing the divestiture transaction process.
Interested parties can participate in the ‘Expression of Interest' process at www.choppies-eoi.com.
Redford Capital is not a related party to Choppies (in terms of the Botswana Stock Exchange Ltd. ("BSEL") Equity Listings Requirements).
Per the announcement published on 1 November 2018, the trading of the Company shares on both the BSEL and Johannesburg Stock Exchange ("JSE") remains suspended until further notice.