Publisher of leading trade magazines for the Footwear, Leather-goods, Leather & PPE industries

S&V Weekly Newsletter Vol.5 No.31, August 5, 2019

This Newsletter is sponsored by SAFLIA

Please note: Click on any ad to go to the advertiser’s website

 

Retail last week

Comment from 5 retailers on Saturday
"It's been okay, not too bad. The last 7 months have been tough, with weekends and month ends okay. Hopefully with Christmas coming up it will improve. We're giving it our best shot." - Sunil Valla, director, Famous Barr, Middelburg, Mpumalanga, SA. Independent, 3 stores, men's outfitter.

"It's been good. We've had quite a bit of Hajj trade, and they need specific sandals which expose the metatarsals. The year overall hasn't been as good as last year. Part of it is that the brands aren't holding as much stock as they were, and there are fewer specials." - Imran Lockhat, member, Famous Shoes, Durban, KZN, SA. Independent, 1 store, comfort and up-market brand specialist.

"Not too bad. Fashion has dropped around the country, but school wear keeps us going. If you keep your head above water, you're doing well." - Abdul Hajat, member, Fana's Outfitters, Bethlehem, Free State, SA. Independent, 2 stores, men's outfitter and school wear.

"It's been a bit slow, and a bad week because of all the violence between the police and foreign traders. The year so far has been fair." - Farid Noorbhai, proprietor, Farino Footwear, Lenasia, Gauteng, SA. Independent, women's comfort and evening footwear specialist.

"It's been a bit quiet for the past few months. We're in what was known as the heart of the town, but many of our traditional customers now go the mall, and the foreigners who come into town prefer cheaper footwear. Crime in town is also keeping people away. A problem for us is that there aren't other sites for us to move to. There's basically 1 shopping street in Brits, and 1 mall." - Mohammed Cassim, manager, Fashion Bazaar, Brits, NW Province. Independent, 1 store, family footwear and schoolwear.

 

 

SARS Footwear team to meet

Pretoria, Gauteng, SA – The SARS Footwear Industry Task Team meets again on August 14. Present will be SAFLIA, SARS & labour.

 

SENS releases last week

Steinhoff International Holdings N.V.

Stellenbosch, W Cape, SA (July 29, 2019) – As announced on 12 July 2019, Steinhoff management will be hosting an Investor Presentation on 13 August 2019. This presentation will take place at the Cape Town Convention Centre, Cape Town. The presentations will start at 10:00 am (South African time) and registration at the venue will be from 9:30 am.
       A live webcast link will also be available on https://www.corpcam.com/Steinhoff13082019
       The event will be hosted by the Group CEO, Louis du Preez, and his management team. The presentations are expected to last one hour and will cover the events that have taken place since December 2017, including improvements in governance, the financial restructure, the financial restatement process, the 2017 and 2018 Annual Reports, the 2019 Half-year Report and an operational outlook.
       If you would like to attend, watch remotely or listen to the presentations, please register in advance as follows:
       Attend presentation: Send an email to rsvp@steinhoff.co.za, including your name and details
       Webcast: Register your details on https://www.corpcam.com/Steinhoff13082019
       A recording of the presentation will be available on www.steinhoffinternational.com after the event.

 

Massmart - extracts from business update; trading statement

Johannesburg, Gauteng, SA (July 30, 2019) – For the 26-week period, Massmart's sales of R43.8bn represent total growth of 5.5% and comparable sales growth of 3.6%, with year-to-date product inflation of 2.7%. Total sales growth from our South African (SA) stores was 4.9%, while the same figure from our ex-SA stores was 11.8% in Rands.
       Sales growth slowed noticeably in the six-week period since our previous update issued at the May 2019 AGM, with total growth of 3.3% and comparable growth of only 1.9%. During this six-week period, comparable sales growth slowed in Massdiscounters and Masswarehouse but increased slightly in Massbuild and Masscash.
       Reflecting the difficult consumer environment, margins were lower than anticipated across all divisions in May and June which resulted in a disappointing Group financial performance for the six months to June 2019 as described in the Trading Statement below.
       Detailed information will be provided as usual in the Massmart interim financial results and presentation to investors on 29 August 2019, but some key points per division are noted below. It should be noted that all performance references below are before the impact of IFRS 16.
       For the six months to June 2019, Massdiscounters will report a trading loss of between R395m and R425m, compared to the June 2018 trading loss of R95m. Profits in Game South Africa are below the prior period, but much lower in Game Africa and DionWired. Compounding this are higher costs from the SAP IT project and supply chain and logistics. There have been several changes to the Massdiscounters executive team in the last few months:
  • CEO Albert Voogd resigned with effect from July 2019 and has been replaced, in the interim, by Andrew Stein. Andrew has been with Massmart for 10 years and has worked in both Cambridge and Makro;
• Riaan Turton was appointed as finance director and Kathrine Madley was appointed marketing director; and
• Neville Hatfield has been appointed merchandise director with effect from July 2019. Neville has been the merchandise director at Builders Warehouse since 2006 and prior to that had been the merchandise director at Game.
       Masswarehouse will report trading profit of between R320m and R370m which is 24% to 34% below the prior period. Much of the lower profitability is caused by the soft sales, margin pressure from the lower sales participation of general merchandise and expense growth caused partly by the new Makro store opened in Durban North in March 2019.

Trading Statement for the 26 week period ended 30 June 2019
  Given the above performances, it is estimated with reasonable certainty that for the six months to June 2019 the Group will report an operating loss, before non-trading items, foreign exchange movements and net interest, of between Rnil and R30m.
       This disappointing performance was caused by softer than expected sales, margin weakness and expense growth of approximately 12% (comparable 9%). New stores representing 3.1% additional trading space have been opened since June 2018 and this impacted on employment, depreciation and occupancy costs in addition to cost-inflation.
       African currency weakness has resulted in foreign exchange losses anticipated to be R81m, in comparison to a foreign exchange gain of R23m in the prior period. The losses are caused primarily by recent currency weakness in Zambia and Nigeria.
       Net interest costs will be approximately 18% higher than the prior period figure of R300m.
       The tax charge has been adversely impacted by an inability to raise deferred tax assets in certain ex-South African tax entities and impairing deferred tax assets in some South African and non-South African tax entities.
       Consequently, excluding the impact of IFRS 16, shareholders are advised that Massmart anticipate, with reasonable certainty, the following for the six months to June 2019:
 
Excluding the impact of IFRS16
Estimated June 2019, Restated* June 2018 and Anticipated % change 
Headline (loss)/ earnings (Rm) - (530.0) to (550.4); 204.1; (359.7%) to (369.7%)
HEPS (cents) - (240.5) to (249.8); 94.8; (353.7%) to (363.5%)
Net (loss)/ earnings (Rm) - (582.4) to (602.0); 195.7; (397.6%) to (407.6%)
Basic EPS (cents) - (264.3) to (273.2); 90.9; (390.7%) to (400.5%)

* 2018 results have been restated for the impact of an error in accounting relating to a long term lease, as set out in note 41 of our 2018 Annual Financial Statements.

Shareholders are reminded that the figures and estimates shown above are before adjusting for IFRS 16 which the Group will be reporting for the first time in the June 2019 interim financial results (and which were the subject of a separate investor presentation held on 14 May 2019). The most notable impact of IFRS 16 is, as a result of capitalizing long term leases to the balance sheet and hence recognizing a right- of-use (ROU) asset and related lease liability, that rental charges are removed from profit and loss whilst being replaced by depreciation relating to the ROU asset and accounting interest relating to the liability. Including the impact of IFRS 16, shareholders are advised that Massmart anticipate, with reasonable certainty, the following:
 
Including the impact of IFRS16
Estimated June 2019, Restated** June 2018 and Anticipated % change
Headline (loss)/ earnings (Rm)# - (774.1) to (794.5); 204.1; (479.3%) to (489.3%)
HEPS (cents) - (351.3) to (360.5); 94.8; (470.5%) to (480.3%)
Net (loss)/ earnings (Rm)# - (826.5) to (846.1); 195.7; (522.3%) to (532.3%)
Basic EPS (cents) - (375.0) to (383.9); 90.9; (512.6%) to (522.4%)
** 2018 results have been restated for the impact of an error in accounting relating to a long term lease, as set out in note 41 of our 2018 Annual Financial Statements but are not adjusted for IFRS 16.
# Included in the impact of IFRS 16 are foreign exchange losses of approximately R76 million relating to the revaluation of US Dollar denominated leases in Africa.
         Massmart's financial results for the six months to June 2019 will be released on 29 August 2019 where a more meaningful proforma financial comparison will be provided in the accompanying results presentation.

 

 

Woolworths trading statement

Cape Town, W Cape, SA (August 1, 2019) – Shareholders are advised that earnings per share ('EPS'), headline earnings per share ('HEPS') and adjusted diluted HEPS for the 53 weeks ended 30 June 2019 are expected to be within the ranges reflected below:
 
  EPS
  June 2018 reported (cents): -369.5 
  June 2019 expected increase/decrease (%): 65.0% to 75.0%
  June 2019 expected range (cents): -92.4 to -129.3
 
  HEPS
  June 2018 reported (cents): 346.3
  June 2019 expected increase/decrease (%): -3.5% to 1.5%
  June 2019 expected range (cents): 334.2 to 351.5
 
  Adjusted diluted HEPS
   June 2018 reported (cents): 364.1
   June 2019 expected increase/decrease (%): -2.5% to 2.5%
   June 2019 expected range (cents): 355.0 to 373.2
 
  EPS reflects a further impairment of the David Jones business. An impairment charge of AUD437.4 million (net of deferred tax) will be recognised at the period end 30 June 2019, reducing the valuation of David Jones to approximately AUD965 million. A strategic review of the David Jones store portfolio has also identified stores with onerous leases resulting in an additional provision of AUD22.4 million at period end.
         The impairment reflects the economic headwinds and the accelerating structural changes affecting the Australian retail sector as well as the performance of the business, which has fallen short of expectations. The WHL Board believes that the valuation of David Jones is realistic and reflective of its prospects.
         EPS, HEPS and adjusted diluted HEPS for the pro forma 52 weeks ended 23 June 2019 are expected to be within the ranges reflected in the announcement.
         The Group manages its retail operations on a 52-week basis and, as a result, a 53rd week is required approximately every six years for realignment. The current year has 53 weeks. To facilitate comparison against the 52-week prior year, financial information for the current year has been presented on a 52 week basis, constituting pro forma information in terms of the JSE Ltd. ('JSE') Listings Requirements.
         The pro forma information, which is the responsibility of the Group's directors, has been prepared for illustrative purposes only, and may not fairly present the Group's financial position, changes in equity, cash flows or results of operations.
         The information contained in this announcement, including the estimated financial information and pro forma financial information, has not been reviewed or reported on by the Group's external auditors.
         The Group's year-end results for the 53-week period ended 30 June 2019 are scheduled to be announced on the SENS on or about 29 August 2019.
 

 

Truworths trading statement

Cape Town, W Cape, SA (August 1, 2019) – Retail sales of Truworths International Ltd. (the ‘Group') for the 52-week period ended 30 June 2019 (the ‘current period') increased by 3.7% to R18.6 billion relative to the R18.0 billion reported for the 52-week period ended 1 July 2018 (the ‘prior period').
       Account sales comprised 51% (2018: 50%) of Group retail sales for the current period, with account and cash sales increasing by 4.5% and 2.8% respectively, relative to the prior period.
       Retail sales for Truworths Africa (being the Group, excluding the UK-based Office segment and comprising mainly of the Truworths businesses in South Africa) increased by 3.1% to R13.5 billion relative to the prior period's R13.1 billion, with account sales increasing by 4.5% and cash sales decreasing by 0.1%. The improvement in the retail sales performance of Truworths Africa in the second half of the current period is encouraging, with retail sales growing by 3.9% relative to the corresponding prior period (first half: growing 2.4%), mainly driven by account retail sales recording an increase of 5.6% in the second half. Account sales comprised 70% of retail sales (2018: 69%). In Truworths Africa, like-for-like store retail sales increased by 0.7% and trading space increased by 1.6% relative to the prior period. Product deflation averaged 0.2% for the current period.
       Gross trade receivables in respect of the Truworths Africa debtors book (relating to the Truworths, Identity and YDE businesses) were at R5.9 billion (2018: R5.6 billion) and the number of active accounts increased by 2.6% to 2.7 million. Active account holders able to purchase and overdue balances as a percentage of gross trade receivables were at 83% and 13% respectively. The book remains healthy and continues to perform in line with management's expectations.
       Retail sales for the Group's UK-based Office segment decreased in Sterling terms by 0.9% to GBP279 million relative to the prior period's GBP281 million. In Rand terms however, retail sales for Office increased by 5.3% to R5.1 billion. Retail sales in the second half of the current period performed substantially better in Sterling terms, growing at 2.0% compared to a decrease of 3.0% in the first half, as a result of an increase in sales of marked down merchandise. The Office segment continued to show good online performance, with online retail sales growing at 9.8% and comprising nearly 34% of retail sales for the current period. Trading space for the Office segment decreased by 5.2% on the prior period, mainly due to the closure of some House of Fraser concession stores.        The continuingly tough trading environment in the UK in the wake of Brexit uncertainty and muted consumer sentiment, combined with the pressure on store-based retailing as consumer spending shifts to online shopping, have impacted the profitability of the Office segment. This has necessitated a re-assessment by management of the carrying value of the Office segment's assets and has resulted in a non-cash impairment charge of GBP97 million (net of deferred tax in relation to trademarks) being raised against the Office intangibles.
       Investors are referred to the SENS announcement published on 2 July 2019 with regard to the potential restructuring of Office's debt. Negotiations with the lenders have progressed constructively, and management believes that they will be concluded successfully. At the end of June 2019, net debt amounted to GBP23.5 million (R418 million) for the Office segment and R663 million for the Group. The Group repurchased 3.75 million shares for R266 million during the current period.
       Despite the difficulties being faced in the UK, the board remains committed to the transformation of the Office business through several turnaround and restructuring initiatives.
       The Group's diluted headline earnings per share (‘HEPS') for the current period, which exclude the impairment of the Office intangibles by definition, are estimated to decrease as follows:
Diluted HEPS range
  *Group - 558 cents – 570 cents
  Truworths Africa segment - 544 cents – 553 cents
*Office segment - 14 cents – 17 cents
Decrease on prior period
*Group - 7% - 9%
*Truworths Africa segment - 3% - 5%
*Office segment - 59% - 66%
       However the Group's earnings per share (‘EPS') for the current period, which include the impairment of the carrying value of the Office segment's intangibles, are estimated will decrease by between 65% and 67% to between 203 cents and 215 cents, relative to the EPS of 615 cents reported for the prior period.
       Investors are advised that this trading statement does not constitute an earnings forecast, that the financial information provided herein is the responsibility of the directors, and that such information has neither been reviewed nor reported on by the Group's external auditors. The Group's audited results for the 52-week period ended 30 June 2019 are scheduled for release on or about Thursday, 15 August 2019.

 

Retirement

Great Brak River, W Cape, SA – Former Bolton Footwear head of design Tom Bailey has taken early retirement, but is still working a few days a month on a consulting basis.

 

They Said It

"Good to be back at my post again ! After spending 3 months rearranging my wife’s grocery cupboard by sell by date, and sorting spices into colour order, t’was clearly time to get back to shoes! This despite the sage advice of my ex partner who stated – 'Hey partner, isn't that a little like swimming back to Alcatraz?'..." - Steve Miller, who has bought Queue Shoes back from Dodo Shoes.

"Clive, just remember I am very, very particular where I shop. Next time when you are counting sheep, please Google Gateway in Durbs ….me and my twins boys have shares in Gateway. I guess they are taking after their old man.  Just remember I don't follow fashion…I am fashion." - DyStar's Granville Steyn, reacting to Dr Clive Jackson-Moss's comment last week about who to ask about where to shop.

"Due to the current bus strike currently taking place in the city of Tshwane, the National Education, Health and Allied Workers’ Union [NEHAWU] has temporarily postponed the demonstrations that were scheduled to take place today at the Embassies of the Kingdom of Spain and of the Kingdom of Morocco in Tshwane." - Nehawu statement on July 31. What wonderful irony.

 

S&V Directory - Order now

The directory is ready. On sale for R450. The online version is also available at R450 for 12 months' access.

 

2019 Trade Fairs Another essential service from S&V

Please note that we have put a list of the 2019 trade fairs and conferences on our website, linked to their websites: http://www.svmag.co.za/events

 

Exchange rates

Source: http://www.x-rates.com/calculator/

 
  Euro € GBP £ US $ Yuan Renminbi ¥
05/01/2019 R15.94 R17.79 R13.99 R2.03
12/01/2019 R15.86 R17.76 R13.83 R2.04
19/01/2019 R15.76 R17.85 R13.87 R2.04
26/01/2019 R15.52 R17.97 R13.60 R2.01
02/02/2019 R15.26 R17.42 R13.32 R1.97
09/02/2019 R15.46 R17.66 R13.65 R2.02
16/02/2019 R15.90 R18.15 R14.09 R2.08
23/02/2019 R15.90 R18.32 R14.04 R2.09
02/03/2019 R16.17 R18.77 R14.22 R2.12
09/03/2019 R16.22 R18.79 R14.43 R2.14
16/03/2019 R16.31 R19.15 R14.40 R2.14
25/03/2019 R16.31 R19.02 R14.42 R2.14
30/03/2019 R16.26 R18.90 R14.49 R2.15
06/04/2019 R15.80 R18.36 R14.09 R2.09
13/04/2019 R15.76 R18.24 R13.95 R2.08
20/04/2019 R15.86 R18.33 R14.10 R2.10
27/04/2019 R16.03 R18.56 R14.37 R2.13
04/05/2019 R16.08 R18.88 R14.34 R2.13
11/05/2019 R15.91 R18.40 R14.16 R2.07
18/05/2019 R16.09 R18.32 R14.41 R2.08
25/05/2019 R16.15 R18.32 R14.41 R2.08
01/06/2019 R16.28 R18.41 R14.57 R2.11
08/06/2019 R16.95 R19.03 R14.94 R2.16
15/06/2019 R16.61 R18.65 R14.81 R2.14
22/06/2019 R16.30 R18.24 R14.32 R2.08
29/06/2019 R16.01 R17.88 R14.08 R2.05
06/07/2019 R15.91 R17.74 R14.17 R2.05
13/07/2019 R15.75 R17.57 R13.97 R2.03
20/07/2019 R15.63 R17.42 R13.93 R2.02
27/07/2019 R15.91 R17.68 R14.29 R2.07
03/08/2019 R16.42 R17.97 R14.78 R2.13
Note: For previous rates, see HERE

 

 

 

ABSA Agri Trends 29/07: Hides & skins prices

Hides: R1.59/kg. NB* Hide prices are determined by the average of the RMAA (Red Meat Abattoir Association) and independent companies.

Hide & skin price progression
Date Hides/Kg Dorper/Skin Merino Skin
18/01/2019 3.94 33.75 81.67
25/01/2019 2.89 31.11 92.78
01/02/2019 2.83 30.63 87.50
05/02/2019 2.53    
13/02/2019 2.95    
15/02/2019 2.95 25.83 62.01
19/02/2019 2.01    
22/02/2019 2.00 31.88 49.21
26/02/2019 2.04    
01/03/2019 2.04 30.00 45.21
14/03/2019 1.63    
20/03/2019 1.60    
27/03/2019 1.67    
10/04/2019 1.68    
24/04/2019 1.78    
26/04/2019 1.49 32.50  
03/05/2019 1.82    
17/05/2019 2.05 34.00  
21/05/2019 1.72    
24/05/2019 1.72 36.67  
28/05/2019 1.74    
31/05/2019 1.74 32.50 48.75
10/06/2019 1.68 41.90  
14/06/2019   25.83 38.57
18/06/2019 1.68 25.83  
28/06/2019 1.66    
01/07/2019 1.67    
05/07/2019   25.00 38.57
12/07/2019 1.70 24.00 38.75
16/07/2019 1.71    
23/07/2019 1.71    
For previous prices, see HERE
 

  

05/08/1933: Roberto Marchesi, designer, Cape Town.
05/08/1953: Iqbal Moosa, Jumbo Footwear, Pietermaritzburg.
05/08/1956: Rafiq Shah, Evoné, Pietermaritzburg.
05/08/1964: Christo Nel, Conloo Joinery, Welkom.
05/08/1979: Deepesh Ghela, National Adhesive Manufacturers, Pietermaritzburg.
06/08/1953: Naren Pattundeen, Palm group, Durban.
06/08/1951: Marius Ferreira, retired, formerly Bolton Footwear, Great Brak River.
06/08/1942: Mahomed Farouk Moosa Seedat, Same Time Shoe Repairs, Durban.
06/08/1959: Mano Chetty, Borage Trading, Pinetown.
08/08/1950: Eldon Fortmann, retired, formerly Bagshaw, Port Elizabeth.
08/08/1953: Doug Hawkey, John Whittle Components, Pinetown.
08/08/1986: PG Needham, Needham Leather Goods, Pretoria.
10/08/1951: Kevin Davidow, Nakara Leather, Namibia.
10/08/1963: Grant Hansen, Apeco, Pinetown.
10/08/1968: Judius Govender, Michelle Footwear, Durban.
10/08/1971: Shane McEvoy, Dodo Shoes, Cape Town.

 

In Memoriam this week

05/08/2002: Darryl Austin (b. 21/02/1947), Austin Shoes, Karmino Shoes [both closed], Pietermaritzburg.
06/08/2012: Bob Johnsen (b. ?), footwear designer, Durban.
08/08/2010: Gareth Davies [b. 02/04/1945], Edgars group, retired, Johannesburg.
09/08/2013: Daniël Bruwer (Stoffel) Matthis (b. 04/05/1934), SHALC and many meat industry bodies, Pretoria.
10/08/2006: Abdool Kader (AK) Seedat (b. 12/03/1933), agent, Durban.
11/08/2011: Ken Riches (b. 15/07/1922), educator, Port Elizabeth.

Have you let us know about your birthday, or the birthdays of your colleagues? Our readers love this section, so please become part of it. This also applies to the In Memoriam section. Help us remember former colleagues.

 

Have a look at these links

We invite businesses to send us links to websites, Facebook pages and the like which they feel would be of interest to others. The links below are from our database:
Basson Workwear, Wellington, Wellington, SA.: http://www.bassonworkwear.co.za/
Bata SA, Pinetown, KZN, SA: https://www.bata.co.za/

 

Contact us

News & Classifieds: Tony Dickson, +27 (0)31 209 7505, tony@svmag.co.za

Next newsletter: August 12, 2019.

SAFLIA enquiries: Tel 0800SAFLIA * Email info@saflia.co.za * Website http://www.saflia.co.za

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