Cape Town, W. Cape, SA - On Friday, TFG streamed its year-end results to investors, media and employees.

To see the full results, go to: https://tfglimited.co.za/wp-content/uploads/2023/06/FYE-23-Investor-Presentation-Deck-2.pdf
To see the webcast, go to: https://www.youtube.com/watch?v=23AOOwP4hLM

CEO Anthony Thunström said turnover was 19.4% up to R51.8 billion, and operating profit was up 12.4% to R5.4 billion.
      He said “I highlighted how we had continued to grow market share across a number of our key categories, especially in our core apparel, sports, homwares and furniture categories. In a low growth environment, this ability to continue to grow at the expense of our competitors is critically important and speaks to the strength of our brands and retail teams.
      “The year ahead is expected to remain challenging and competitive, especially with the current load shedding crisis and global economic uncertainties. Therefore, we are treating this year as one of consolidation and focusing on driving efficiencies and improving our profitability, while still delivering on our identified strategic growth initiatives.
      “We all need to redouble our efforts to support turnover, contain expenses, and deliver a superior experience to every one of our customers.”

In the Q&A session, he said that:

TFG has become the biggest clothing manufacturer in SA. He said outsourcing “doesn’t work”, and that TFG had “paid big school fees” to learn that.
TFG intends to reduce the number of distribution centres by about half to 7.
In apparel, TFG had passed on about 9% of the 14% of inflationary increases.
Load shedding had had “devastating” results. “We were trading at record levels for 9 months to the beginning of December”, but that after load shedding increased in the second week, “consumers stayed away and went into negative mode”, a situation which lasted until the end of March. He said TFG “conservatively” estimated a R1.5 billion loss in turnover and an R800 million profit loss for those months. TFG also spent around R200 million on generators.
In SA, around 30 million people – about half the total population – are on a TFG rewards basis.

Friday, 16 June, is SA’s last public holiday until August, and a long weekend to boot. We asked an assortment of retailers whether they anticipated an upswing in trade and whether they had made any special preparations.

Anca Facauaru, proprietor, Anca Shoes
Kempton Park, Gauteng, SA - Things are very quiet, with people not having money to spend (shoes are a luxury today). The load shedding, price increases because of the Rand depreciation against the Dollar, high unemployment, all make it very hard to operate, but I’m trying to do the best I can to keep the shop open.

Kelli Kupritz, Marketing Director, Dodo Shoes
Johannesburg, Gauteng, SA - June has started off well for both Dodos and Franco stores. We don’t foresee any uptick in trade over the long weekend, in fact quite to opposite; these long weeks in our experience are not good for retail as our customers use their money to travel instead of buying shoes.
Load shedding continues to affect our business daily, with certain stores without electricity for hours on end. But saying all of this we remain positive and focused on the things we can control and not those we can’t.

Sunil Bhagwandas, member, Gingers International [Ginger Bhagwandas cc]
Durban, KZN, SA - We are hoping for an uptake in trade over the long weekend, and we are opening all 4 stores on 16 June.
Winter trade has been challenging and unpredictable. The negative macroeconomic factors in SA are impacting on the mood of consumers. Competing with aggressive chain stores, factory shops, foreign stores and price cutting independent retailers makes it hard, to say the least.
      We’re an independent retailer and must persevere to do our best for our customers.
      I hope the second half is more positive.

Ralph Pereira, partner, Limited Edition
Cape Town, W. Cape, SA - We keep chugging along. Our consumers are mid-market, and they’re cash-strapped, so we might not get much response in the middle of the month. We prepare for month-end, and the reps we speak to say other retailers are finding the same. Shoppers are being very conservative, and our strategy is to be consistent.

Cheryl Kretschmer, Group Buyer, Spargs Group
East London, E. Cape, SA - The situation in the Eastern Cape is one of customers buying their needs rather than wants. This can be seen in the steady sales of items such as school shoes, workwear boots and gumboots. Men’s shoe sales continue to exceed ladies’ sales. We received late deliveries last year from some of our major brands and carried this stock over for winter.  We certainly did not buy in much additional stock for men this winter.  Ladies’ remains a price competitive market.
      Although winter is normally a quiet season, this March and April were particularly quiet. Customers seem to have purchased their winter merchandise later than normal.
      There has been a slight upswing in sales for May. June so far looks promising.
      We remain optimistic for summer even with the combined challenges of the rand exchange rate and the delay in deliveries of product from suppliers due to loadshedding.  Let’s hope the ports don’t have a glitch in October/November.

Cape Town, W. Cape, SA – On Friday, Ares Holdings SA was formally announced as the Vans distributor from 01 January, taking over from Bounty Brands.
      Ares also distributes 2XU, Birkenstock, Crocs and Under Armour.
      A spokesperson for Ares responded to S&V ‘s questions:

• Vans originally said it would open a subsidiary in South Africa. Why has it decided to continue with a distributor? You would need to chat to VF Corporation.
• Why has it changed distributors? Bounty Brands contract is expiring at the end of this year. We submitted a proposal, were invited to meet with them and were lucky enough to be awarded the contract as of Jan 2024
• Will Ares take over the former Bounty Brands Vans agents and/or any other staff? We are not taking over the existing business. The distribution rights will sit in a new entity which is wholly owned by Ares. Naturally we will need to build a team to take the brand forward in the SA market. Our org structures are being finalised as we speak. All the roles will be publicly advertised and any of the existing team currently working on Vans will be welcome to apply for open roles. It makes sense to leverage some of the experience that exists where relevant however we would need to ensure that not only are they a cultural fit for our organization but they have the skill-sets specific to our business model and way of working.
• What changes will there be to Vans distribution in SA? We are currently reviewing the existing distribution and building our “Go To Market” Plans for SS24.
• Have Vans sales in SA declined in recent years and can you quantify that? The brand demand continues to be healthy in the SA market.

Vans has been in SA for over 20 years and has 11 retail stores in 3 cities, an online store and distribution via sport and lifestyle retailers.

Springs, Gauteng, SA - Hannitan has started work on a crusting plant in Atlantis, outside Cape Town, to open probably in August, MD Rudolf Hanni said on Friday.

      “It’s not replacing Hannitan,” he said. “It’s to alleviate bottlenecks in Springs, and the reason we’ve chosen Atlantis is that it has a more reliable electricity supply.”

      He said the plant would have the capacity to process 1 000 hides/day.

      He said the plant would mainly supply Hannitan, but would also serve the export market.

Durban, KZN, SA - In the last issue you had an article from proudly South African focusing on job creation. Unfortunately, it will not work if government doesn’t get involved and start cleaning up the illegal imports and fakes that are sold for billions of rand that are affecting manufacturers and retailers who work by the book.
      Over the last few years, most of the independent retailers who used to support local manufacturers closed because they couldn’t compete with the foreign nationals who operate businesses. These guys don’t pay taxes, none of their workers are registered etc., so look at the advantages they have against us.
      Why don’t SARS and labour officials do their jobs instead of only worrying those that are registered and battling to survive?
      The other big irony: Locals are crying for jobs, but they support these guys (the people selling fakes). Last week I stood at the entrance of my factory watching my workers coming in. Of the 140 people, only about 5 were wearing local footwear. More education needs to be given to the general public on the impact of not buying ‘made in China’. I pray we get the days back when the shoe industry employed 48000 workers compared to the 8000 that we currently employ.