S&V Weekly Newsletter Vol.5 No.33, August 19, 2019

This Newsletter is sponsored by SAFLIA

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Retail last week

Comment from 4 retailers on Saturday
"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.

Stock Exchange News Service (SENS) release

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%).

Stock Exchange News Service (SENS) release

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.

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."

They Said It

"I've been promoted to receptionist." - Woods Tanning's Andy Wood on why he was answering the phone.

"I'm going to offer a little bit of vegan in the new store - just to make some people happy - but I believe in leather. I love it." - Jianny Kechriotis, director, Freequency Footwear, Johannesburg, Gauteng, SA.

S&V Directory - Order now

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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/

ABSA Agri Trends 13/08: Hides & skins prices

Hides: R1.57/kg. NB* Hide prices are determined by the average of the RMAA (Red Meat Abattoir Association) and independent companies.

19/08/1959: Luis de Freitas, Leather Leisure, Welkom.
19/08/1979: Suran Sukdav, Ornella Footwear, Durban.
20/08/1965: Craig Brouwer, Albatros Clothing & Promotional Gifts, Germiston.
20/08/1980: Nicholas Bryant, A Greenaways and ProFit Safety Footwear, Cape Town.
21/08/1949: Brian Pollock, retired, formerly Jordan Shoes, Cape Town.
21/08/1952: Wayne Little, Matas Import, Cape Town.
21/08/1974: Lisa Rheeder, Acol Chemical, Harare.
22/08/1936: Norma Varley, retired, Edgars, Durban.
22/08/1954: Jax Snyman, The Sweat Shop, Johannesburg.
22/08/1956: Carlo Longano, Bodynamics Institute, Cape Town.
23/08/1947: Leon Volschenk, Leo D’ Mar, Great Brak River.
23/08/1949: David Sheppard, DP Sheppard & Co, Port Elizabeth.
23/08/1965: Glyn Giani, the Footwear Design & Technology School of SA, Pinetown.
24/08/1940: Fred Carpel, agent, Johannesburg.
24/08/1944: Rolf Oltmanns, retired, PMC Group, Pinetown.
24/08/1957: Clive Wood, Crown Footwear, Pinetown.
24/08/1961: Ulf Oehl, Stahl SA, Midrand.
25/08/1957: Judy Ambrose, left the industry, formerly agent, Durban.
25/08/1970: Imran Mahomed, Mr American, Malelane.
25/08/1972: Andrew Fenwick, Saddler Belts & Leathercraft, Durban.
25/08/1978: Adrian Ramsamy, Michelle Footwear, Durban.
25/08/1980: Yvonne Speirs, Fusion Leather, Durban.
25/08:19??: Anthea Ball, Adidas, Cape Town.

In Memoriam this week

19/08/2002: Dick Ilsley (b.11/12/1921), BUSM [closed], Durban.
20/08/2016: Gordon Horsfield (b.), GW Cowie & Co, Durban.
21/08/19??: Edward Jones-Davies (b. 10/06/1925), BUSM [closed], Port Elizabeth.
21/09/1993: Bhagwandas Dayaram Ambaram (b. 15/07/1943), JFK Trading, Durban.
22/08/2006: Bob Butler (b. 01/02/1928), Burton’s Shoes, Cape Town.

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

Next newsletter: August 26, 2019.

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