S&V Weekly Newsletter Vol.6 No.08, February 24, 2020

This Newsletter is sponsored by SAFLIA

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Retail so far this year

"December was pretty flat. January improved slightly as a percentage of growth, and February is trading up quite nicely on comparative stores. That's despite load shedding. South Africans are a pretty resilient lot, so maybe they're getting used to it. We opened 5 new stores last year, including in the Western and Eastern Cape, so we now have a national footprint, and we'll open a few more this year, in Gauteng, Mpumalanga, and the Western and Eastern Cape. There are opportunities if you pay attention and filter out the noise. There are still sales, and the problems being experienced by some of the bigger chains are probably helping smaller retailers to fill up these little gaps." - Kim Cunniffe, MD, Kingsmead Shoes, Durban, KZN, SA. National chain, family footwear.

"I wish I could give you a more positive message, but we've had a terrible February so far. We hear that cell phone tower batteries are being stolen, which makes things worse. One of the many problems with load shedding is that we lose credit card sales. We didn't seem to have Speed Point issues during the last round of load shedding, but now we do." - Naseem Essack, member, Brandz, Port Shepstone, KZN. Mini-chain, 5 stores, family outfitter.

"It's challenging. Times have changed, for the better for people who are forward thinking. New consumers have new ways of thinking, and they have many new platforms to choose from. We'll have to adapt." - Adrian Levi, member, Hepworths. He has recently take over, with Conrad Moolman, from his father.

"There's no change from last February, and January wasn't good. Unemployment is very high, and we're expecting more retrenchments. Landlords don't want to bring their rentals down, but if we are both to survive, they have to play ball." - MF Ebrahim, member, Kinky Shoes, Johannesburg, Gauteng, SA. Mini-chain, family footwear.

They Said It

"In those days it was only cold showers. I've just been to a reunion, now it's hot showers and much better food." - Eastern Cape agent and Kingswood College, Grahamstown, old boy Donald Smale. So it wasn't always better in the old days...

"How can we get the message to China and the Far East that rhinos are also distributing the corona virus. Wouldn't that be wonderful if we could?" - Fred de Lange, Central Suppliers, Port Elizabeth. Absolutely. And abalone, tiger bones and shark fins.

Changes

Durban, KZN, SA  – There have been several changes to SAFLIA's management committee (Mancom).
       The PMC Group's André Compion resigned last year, and was initially replaced by the group's Andreas Horvath, who has subsequently returned to Austria, and who was in turn replaced by Gregg Ripley-Evans, of the group's John Whittle Components.
       Francois Strydom, former COO of Bolton Footwear Southern Cape Division, has left Bolton and resigned from Mancom.
       In his place are Labora Shoes' Desmond Chunderlal and Michelle Footwear's Warren Gedye.
       The other members are chairman Noel Whitehead (Bolton), vice chairman Jackie Hay (Little Slipper), director Jirka Vymetal, and board members John Comley (Celrose/Eddels), Mark Gibbings (Apeco), and Willowton Footwear's MA Mahomed.
       The next board meeting will be in March on date to be confirmed.

Durban, KZN, SA  – Crouch Footwear KZN agent Charlie White retires at the end of February.

Woolworths Holdings Ltd

Extracts from the unaudited interim group results for the 26 weeks ended December 29, 2019
Woolworths Fashion, Beauty and Home (‘FBH’)
Sales and comparable store sales both grew by 2.2% and by 0.9% after adjusting for the shift in trading weeks. Price movement in Fashion categories was 4.0% and overall net space growth across FBH was 1.2%. Our Black Friday performance was disappointing due to under-participation. Womenswear underperformed as a result of some product failure, a lack of newness in summer and higher price points, which also impacted sales and volumes. Gross profit margin decreased by 0.5% to 46.6% mainly due to stock write-offs as South African brands exit the Australian market. Expenses grew by 4.8%, while store costs increased by 3.7%, resulting in negative operating leverage. Operating profit decreased by 8.9% to R834 million, with an operating margin of 11.5%.

David Jones
Turnover and concession sales for the period increased by 4.9%, but were disappointingly 0.5% lower after adjusting for the shift of the Christmas week. The bushfires impacted footfall and sales at the end of the half, although sales were up 1.3% for the second quarter and we gained market share in a tough market. The disruption from the Elizabeth Street store refurbishment had a significant impact, but this was reduced in the last two weeks of December subsequent to the opening of the ground floor. Comparable store sales (which include online) were 0.4% lower after adjusting for the trading week shift. Online sales grew by 61.8% and now comprise 10.4% of total sales. Gross profit margin was 2.9% lower than the prior period due to the inclusion of Boxing Day clearance in the first half, a higher proportion of promotional sales, disruption from refurbishments and reversal of certain inventory related provisions in the first half of last year. Store costs increased by 4.7%, while other operating costs were flat on the prior period. Operating profit declined to A$20.0 million, with an operating margin of 1.7%.

Country Road
Group Sales, which were also impacted by the bushfires, declined by 2.5%. However, sales increased by 3.3% excluding the impact of the Myer exit. Comparable store sales (which include online) grew by 0.1% after adjusting for the shift in trading weeks. Online sales in Australasia grew by 6.2% and now represents 21.4% of total Australasia sales. Net space in the Country Road Group reduced by 8.1%, which includes the space exited in Myer. The Myer transfer to other channels has been better than expected. Gross profit margin declined by 1.7% to 62.3% due to lower full-priced sales. Expenses were 4.1% lower due to the Myer exit. Operating profit decreased by 8.2% to A$56.0 million, resulting in an operating margin of 10.4%. As the contribution from online sales increases, the reduction of unproductive space remains a priority in David Jones and the Country Road Group.

Truworths results

Cape Town, W Cape, SA (February 20, 2020) - Revenue for the year was 1.2% higher to R11.0 billion (R10.9 billion) whilst gross profit increased by 1.4% to R5.4 billion (R5.3 billion). Trading profit lowered by 3.2% to R1.75 billion (R1.81 billion). Profit attributable to equity holders decreased to R1.5 billion (R1.6 billion). In addition, headline earnings per share went up 0.5% to 364.9 cents per share (363.2 cents per share).

Interim dividend: The directors of the company have resolved to declare a gross cash dividend from retained earnings in respect of the 26-week period ended 29 December 2019 in the amount of 249 South African cents (2018: 249 South African cents) per ordinary share to shareholders reflected in the company's register on the record date, being Friday, 13 March 2020.

Company outlook
South Africa: Truworths
South Africa’s retail trading environment will remain constrained in the short to medium term due to the country’s low economic growth. In this environment Truworths will continue to focus on its proven merchandise strategies, exercising tight cost and margin control, ensuring the health of the account portfolio and maintaining a strong balance sheet. Truworths will look to leverage technological advancements, data analytics and artificial intelligence, further integrate its physical and online retail offerings, build on its fast fashion and quick response capabilities and continue to grow its account base in order to position the business optimally for future growth.
       Truworths’ retail sales for the first seven weeks of the second half of the 2020 reporting period increased 11.9% compared to the first seven weeks of the prior corresponding period mainly as a result of the movement in the timing of the end-of-season sale. Trading space is planned to increase by approximately 1% for the 2020 financial period and is expected to remain unchanged for the 2021 financial period.

United Kingdom: Office
Office is expected to continue to encounter headwinds for the remainder of the financial period to June 2020 as negative consumer sentiment and Brexit-related uncertainty suppress retail sales growth. The Office chain also faces ongoing cost and margin pressure from the consumer shift from store-based retailing to online shopping. The Office turnaround strategy announced in September 2019 is progressing according to plan including the restructure of Office’s debt at the end of September 2019, on more favourable terms. The ongoing focus on merchandise control is evident from the 11% reduction in finished goods inventory, in Sterling terms, relative to the prior period.
       Office’s retail sales for the first seven weeks of the second half of the 2020 reporting period decreased 14.4% in Sterling compared to the first seven weeks of the prior corresponding period. This decrease is mainly due to lower sale activity as a result of lower carry-over inventory and fewer launches of new ‘in-demand’ styles of major brands in January 2020. Trading space is planned to decrease by approximately 7% for the 2020 financial period and is expected to decrease by a further 9% for the 2021 financial period.

The 2020 S&V Directory - Order now

The 2020 edition of the S&V Directory is in production and will be available soon. The online version is available immediately at R450 for 12 months' access.

2020 Trade Fairs Another essential service from S&V

Please note that we have updated most 2020 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: Hides & skins prices

Hide prices (February 19, 2020) - The current average hide price remains at R1.36/kg, compared to a week ago. The current price however, is 0.9% higher than prices were a month ago and is 44.4% lower than prices were a year ago. The local and global hide market remains under pressure, especially with the spreading of the coronavirus impacting manufacturing operations in China. - Conce Moraba, agricultural economist, Absa group.

24/02/1954: Linda Gordon, Riversdalse Skoenwinkel, Riversdal.
24/02/1973: M Taljaard, Taljaard Shoe Store, Germiston.
26/02/1946: Brian Carmichael, MTL Trading, Cape Town.
26/02/1959: Prakash Chiba, Falcarragy Trading, Durban.
26/02/1961: Keith Lyons, Strayz, Pinetown.
26/02/1981: Ndlela Mazibuko, BBF Safety Group, Pinetown.
27/02/1975: Denver Mahabeer, Edgars, Johannesburg.
28/02/1945: Basil da Silva, Mendelson & Frost, Cape Town.
28/02/1969: Dilesh Dajee, agent, Johannesburg.

In Memoriam this week

27/02/2010: Jean Mee ‘Mick’ Lailvaux (b. 22/02/1919), Service Agencies (closed), Durban.
27/02/2010: Amanda ‘Mandy’ Terry (b. 20/02/1969), Makro, Johannesburg.
28/02/2016: Johnny Parboo (b. 21/10/1945), Labora Shoes, Durban.
01/03/2004: Sandra Faye Campbell (b. 09/06/1971), Dunn’s Stores, Johannesburg.

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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:
C&R Brand Solutions, Johannesburg, Gauteng, SA. Corporate products supplier.
Calvano, Johannesburg, Gauteng, SA. Wholesaler.