S&V Weekly Newsletter Vol.6 No.11, March 16, 2020

This Newsletter is sponsored by SAFLIA

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Virus Shutdown: Factories "Not affected yet"

Umhlanga, KZN, SA (March 16, 2020) – The stringent measures announced yesterday evening by the government to attempt to stop or slow the spread of Covid-19 "do not affect factories at this point", Saflia director Jirka Vymetal said this morning.

Although the measures include a ban on meetings of 100 people or more, "that aimed at social gatherings, so far as we understand", he said. "after all, the economy has to carry on."

He said "to avoid non essential air travel businesses should try as much as possible to tele-conference, Government and many industry associations etc. have already implemented this effective today"

Retail so far this year

"Horse riding has become a very expensive sport, and fewer parents can afford it for their children. Among adult riders, there's been a swing to the Western Mounted Games discipline, which has fewer dress rules, which impacts on us. Overall, margins are down. The other side of our business, supplying shoe repairers, is stable." - Ahmed Dadoo, Saddle Creek Enterprise (Pty) Ltd, Vereeniging, Gauteng, SA. Independent, 1 store, saddlery, harness and riding boot specialist.

"It's been much the same as last year, though people are travelling a bit less and there are fewer people in the centre during load shedding. We've had a couple of people who have cancelled their trips, and therefore their purchases, because of the coronavirus." - Adelle Barnard, sales, The Matador cc, Port Elizabeth, E Cape, SA. Independent, travel goods.

"It's been better than last year, so far, but you have to remember that last year was very bad indeed. Christmas was better than we had expected - we were anticipating blood on the streets - and because January and February, which are our nightmare months, were better, we are fairly optimistic going forward. We've also brought in new brands." - Durban independent men's lifestyle retailer who requested anonymity because "there are a handful of independents left, and it's become cutthroat".

Stock Exchange News Service (SENS)

AVI interim results, December 2019

Johannesburg, Gauteng, SA (March 09, 2020)  – Revenue for the interim period increased by 1% to R7.142 billion (2018: R7.069 billion), gross profit increased 0.1% to R2.967 billion (2018: 2.965 billion), profit attributable to owners of AVI rose to R1.349 billion (2018: R994.2 million), while headline earnings per share decreased by 3.8% to 293.8 cents per share (2018: 305.5 cents per share).
Dividend: Notice is hereby given that a gross interim ordinary dividend No 94 of 160 cents per share for the six months ended 31 December 2019 has been declared payable to shareholders of ordinary shares.

Outlook: The trading environment will remain difficult with constrained consumer spending presenting an ongoing challenge in many of our categories. We expect that some of our categories will continue to have low, or even negative, growth rates until there is a meaningful improvement in the economy. Furthermore, our competitors and retailers are likely to continue to behave aggressively in search of market share and constrained profit opportunities. Notwithstanding this, we are targeting profit growth in the second semester, underpinned by:

*Our strong brand portfolio and relevant innovation;
*Foreign currency exposures and key raw materials for the majority of the year’s requirements hedged and secured at levels that support sound profitability;
*Ongoing efforts to manage costs and efficiencies across all businesses;
*Expected lower finance costs in line with lower debt levels.


Anticipated sales volumes remain key to achieving this growth and we will continue to react quickly to market changes as we pursue the most appropriate balance of price, sales volume and profit margins for each of our brands. AVI International, supported by our South African manufacturing capabilities, remains focused on steadily building our brands’ shares in export markets while sustaining strong profit margins. I&J’s prospects remain materially dependent on fishing performance and exchange rates. We remain of the view that the performance of the hake resource is set to improve over the next few years, while export exchange rate hedges are at levels that support sound profitability, and the more recent Rand weakness provides some upside potential. The deadline for the hake long-term rights application process has been extended by a year and the process is not expected to impact on operations in the second semester. There is considerable uncertainty as to how long the Coronavirus and Hong Kong protests will disrupt abalone demand but it is very likely that the contribution from this business will be lower than last year. The Board is confident that AVI remains well positioned to compete effectively; prudently manage fixed and variable costs; and, recognising the challenging environment, be alert for appropriate acquisition opportunities both domestically and regionally.

Pepkor - trading and the impact of the Coronavirus

Cape Town, W Cape, SA (March 11, 2020) – The following update was provided at the Pepkor annual general meeting today by Leon Lourens, the Chief Executive Officer of the Company: Consumers have remained under financial pressure in the current economic environment and trading remains volatile. Trading during January was stronger in both Pep and Ackermans which achieved double-digit growth in sales on the back of the shift in "back to school". This was followed by weaker trading in February and brings year-to-date performance largely in line with that what was reported during the first quarter.
       Trading in both JD Group and The Building Company was weaker during January and February in context of the continued challenging trading environment for durable and building material products. High unit prices and the challenges in the construction industry continue to impact on the businesses in these divisions.
       The impact of the Coronavirus (COVID-19) has not been significant on group sales year-to- date but will undoubtedly have an impact on the second half of the current financial year due to the lag effect in the supply chain. Most of Pepkor's retail brands source products from China and interruptions in production will in all likelihood lead to temporary shortages on certain stock items. Certainty on the exact impact will only become clear once most factories resume normalised production levels.
       Pepkor's defensive business model will count in its favour to reduce the risk and impact on the group. The bulk of Pepkor's product range is defensively skewed towards basic, everyday products which are sourced well in advance of it being required in-store. This results in fairly long supply chain lead times, allowing our buying teams, in collaboration with our long-term loyal suppliers, the opportunity to tactically respond and put measures in place to mitigate any negative impact. Management therefore expects interruptions to its product availability but remains optimistic that customer service levels in the respective retail brands will be largely maintained.

HomeChoice final results December 2019: Profile data summary

Cape Town, W Cape, SA (March 12, 2020) – Revenue for the year increased by 7.3% to R3.5 billion (2018: R3.2 billion) and operating profit dropped 11% to R679 million (2018: R763 million). Profit and total comprehensive income for the year decreased by 13.8% to R455 million (2018: R528 million). In addition, headline earnings per share were 14.1% lower at 436.0 cents per share (2018: 507.7 cents per share).

Dividend declaration: Notice is hereby given that the board of directors has declared a final gross cash dividend of 79.0000 cents (63.2000 cents net of dividend withholding tax) per ordinary share for the year ended 31 December 2019. The dividend has been declared from income reserves.

Company outlook: The economic outlook for South Africa remains muted with high unemployment and a slow recovery in key economic indicators. The vibrant informal economy continues to show growth as more individuals supplement their primary income with a secondary income derived from the informal sector.

We are committed to continue to drive our strategic initiatives and, with a loyal and expanding customer base, strong brands and continuous innovation, we believe we are well positioned to drive growth.
       Potential risks from the Coronavirus are being actively managed and we currently do not foresee it having a material impact on the group's supply chain.
       Our vision is to provide for our customers' lifestyle through digitally focused and innovative retail and financial services products and for the group to be a leading digital player in the mass market.

They Said It

"I don't believe in wasting people's time." - Bolton Footwear MD and BBF Safety Group MD Alan Fleetwood (a big cheese, in other words), on why he takes calls without them being screened by a secretary or PA. No doubt he'd soon cut off someone he doesn't feel should be calling him, but maybe some other senior people should take note.

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 (March 11, 2020) - The current average hide price increased marginally by 0.4% to R1.30/kg from R1.29 a week ago. The current price, however, is 4.8% lower than the average price a month ago and is 20.5% lower than the average price a year ago. The hide market remains in dire straits. Supply chains in Italy and China (and other regions) have been significantly disrupted due to the coronavirus outbreak, and until that normalizes, the global and local hide prices are expected to remain volatile. - Conce Moraba, agricultural economist, Absa group.

16/03/1961: Doc Motala, Crown Footwear, Pinetown.
16/03/1965: Rod Bloom, Barksole Shoe & Bag Repairs, Cape Town.
16/03/1979: Matthew Boltman, Noo Shoes, Pretoria.
16/03/1987: Pankaj Mistry, Superstar Fashions, Vereeniging.
18/03/1948: Stan Rabinowitz, Footwear Direct, Johannesburg.
18/03/1980: Rory Ramsay, Feetfirst Distribution, Durban.
19/03/1959: Deon van Rensburg, Wayne Plastics, Krugersdorp.
19/03/1972: Morné Pienaar, Memories, Bloemfontein.
19/03/1972: Faieza Akoon, Urban Legends, Bloemfontein.
20/03/1982: Ashley Kisten Pillay, Topline Manufacturers, Durban.
21/03/1970: Shuhui Liu, Chang Tong Trading, Johannesburg.
21/03/1971: Jane Moodley, Michelle Footwear, Durban.

In Memoriam this week

17/03/1995: Kees Pulles, Futura Footwear, Loskop.
16/03/2008: Tilly Amery, FISA, Durban.
21/03/2019: John Drier, United-Fram, Johannesburg.

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:
Cape Cobra Leathercraft, Cape Town, W Cape, SA. Leather goods manufacturer:
NEW SITE: Cape Karoo International, Mossel Bay/Oudtshoorn, W Cape, SA. Exotic leather tannery:

Contact us

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

Next newsletter: March 23, 2020.

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