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

S&V Weekly Newsletter Vol.6 No.27, July 6, 2020

This Newsletter is sponsored by SAFLIA

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

 

Retail last week

Not a pretty picture

N.C. Denton Wholesalers, men's outfitter, 1 store
Johannesburg, Gauteng, SA – Director Navin Chiba said the business had been closed last week after a staff member tested positive for the virus. It will be reopening today. Prior to that, he said trading had been "on and off, and impossible to predict". He said since the end of the lockdown it had been busier during the week than at weekends. Quite a number of customers were spending UIF and retrenchment money "and when that's finished, there will be a problem...It's survival mode at the moment, but there is turnover."

Navsaria Expert Shoe & Bag Repairs & Retail Store, repairer and shoe retailer, 1 store
Port Elizabeth, E Cape, SA – Proprietor Naren Navsaria said that for the end of the month, business was quite slow. "We were busy for the first week after reopening, but then it settled down." The Eastern Cape has been hard hit by the pandemic, and he said consumers were nervous about shopping. "We have to trade to survive. We're advertising more, and we'll take on repairs we wouldn't have tried before. At this time of year, women want their boot shafts extended or made narrower or wider, and we're doing all that. We're also photographing what we do and sending the photos by WhatsApp to everyone on our mailing list."

Nevill's Clothing, men's and women's outfitter, 2 stores
Nelspruit, Mpumalanga, SA – Trade has been "awful", even when stores first reopened, member Erna Blum said. "People are afraid to come out, and they're basically just shopping for food. When they do look at clothing, they're looking for 'Covid prices'." She said Nevill's had a mid-month sale, and offered local VIPs the chance to come in the day before, "but even they didn't come". Nevill's offers home deliveries to account customers. "People are buying more online, but with clothing, I think they still mostly want to try things on before they buy them."

 

Wage negotiations

No reaction yet to tanners', footwear manufacturers' quest to suspend increases this year

Durban, KZN, SA – The tanning and footwear sectors of the National Bargaining Council of the Leather Industry of SA (NBC) will meet tomorrow and on Friday respectively to follow up on last week's first round talks in which the employer organisations, the SA Tanning Employers' Association (SATEO) and the Southern African Footwear & Leather Industries Association (SAFLIA), tabled requests for no increases this year because of the state of the economy, NBC general secretary Gerald Naidoo said last Friday. In a multi-year agreement signed last year, both sectors had been in line for 7.5% increases.
       The general goods sector, which had its first round of negotiations last week, the Association of SA Manufacturers of Luggage, Handbags & General Goods (ASAM) will have a follow-up meeting on Thursday with the unions, NULAW and SACTWU.
       The Temporary Employee Relief Scheme (TERS), the mechanism government put in place at the beginning of the lockdown to provide weekly-paid employees with a percentage of their wages from the Unemployment Insurance Fund (UIF), ended at the end of June.

 


Please note that the telephone number in the above ad was incorrect when it was first published. The number shown above is the correct number.

 

Correction to SAFLEC article

In the article on SA's footwear exports in the June issue of S&V Footwear & Leather Goods, it was stated that exports to Zambia had dropped by 250 000 million pairs. That should have been 250 000 pairs, obviously.

 

Stock Exchange News Service (SENS)

Steinhoff: Media release

Stellenbosch, W Cape, SA (July 01, 2020)  – Steinhoff is continuing its journey to address past deficiencies, and to bring stability to the Group and its businesses.
       While the road ahead remains difficult, the financial year ended 30 September 2019 was a pivotal period for the Group, during which we made tangible progress, most significantly with the completion of our financial restructuring following the implementation of the CVAs and the associated changes to our group structure and governance arrangements. Furthermore, the Group reclassified a number of businesses as discontinued operations or held-for-sale assets and adopted a number of new IFRS statements.
       The final months of the 2019 financial year marked the successful completion of phase one of the three-phase recovery process, with the implementation of the Group debt restructuring. In the period that followed we have been concentrating on possible solutions to the litigation faced by entities within the Group and debt reduction initiatives. However, these remain demanding objectives.
       Major milestones were achieved in May and June 2019 respectively when we published the delayed 2017 and 2018 Annual Reports. Thereafter, in August 2019 we satisfied all the conditions necessary to successfully implement the financial restructuring, the culmination of a major collective effort by internal and external teams over the preceding twenty-month period. This significant achievement secured a period of financial stability for the Group up to the end of December 2021, during which we can restructure our businesses, dispose of assets to reduce debt to more manageable levels and/or restructure the debt as part of our recovery plan.
       The scope of work necessary to complete the financial restructuring was wide ranging, complex and highly technical, involving hundreds of creditors, specialist legal and financial advice and parallel processes across multiple jurisdictions. The sheer volume of announcements made by the Group in the lead-up to August 2019, on both financial reporting and restructuring activities, amply demonstrates the scale of these endeavours. However, after August, the Group moved into a different, and by necessity less visible, phase of the recovery process. Our determination to complete the job at hand is undiminished and work continues on many challenging fronts.
       As in the previous financial year, the costs of these processes were substantial, and they had a significant impact on the reported results for the year. Advisory fees for the Reporting Period amounted to EUR158 million (2018: EUR117 million). The total included EUR16 million (2018: EUR24 million) relating to the forensic investigation and technical accounting support, and EUR67 million (2018: EUR43 million) relating to creditor advisor fees, which we are obligated to fund.
       In addition, following the events uncovered during December 2017, the audits for the 2017 and 2018 financial years were extremely complex and time consuming, and required the restatement of prior year results. The audit work for 2017 and 2018 was completed over multiple periods and was expensed in both the 2018 and 2019 Reporting Periods. The majority of the 2018 audit was performed in the 2019 Reporting Period and has been expensed in the 2019 Reporting Period. The majority of the 2019 audit work was performed in the 2020 Reporting Period and will be expensed in the 2020 Reporting Period when billed.
       Every effort is being made to limit advisor costs and, with implementation of the financial restructuring now behind us, we expect the total to fall in the 2020 financial year. However, legal advisory fees are expected to remain significant in the period ahead as we attempt to resolve and deal with outstanding litigation and seek redress against former executives and related parties.

Financial Performance: During the period Steinhoff was refocused as a global holding company with a broad range of interests in the retail sector. These businesses operate a number of strong local brands and are well diversified by geography and business line. Individual businesses, such as Pepkor Africa and Pepco Group (formerly Pepkor Europe), continued to perform robustly, while others remained in turnaround but reported more encouraging trade, such as Mattress Firm, or, like Conforama, remained at an earlier stage of their recovery journey.
       Despite the many challenges we faced in the 2019 financial year, the Group reported a resilient performance, with strong results from certain businesses compensating for weaker outcomes from those still in turnaround. Total revenue from continuing operations for the year ended 30 September 2019 increased by 5% to 12.0 billion (2018: 11.4 billion), with strong contributions from Pepco Group (+12%) and Pepkor Africa (+4%). Further information on the performance of the Group’s individual operating businesses is contained within the accompanying Operational Review.

Financial Restructuring: The financial restructuring of the Group became effective on 13 August 2019 when the SEAG and SFHG CVAs were successfully implemented. Under the terms of the CVAs, the existing debt instruments in SEAG and SFHG were reissued with effect from 13 August 2019, with a common maturity date of 31 December 2021. No cash interest is payable by the Group in this period, as interest will accrue and is only payable when the debt matures, providing Steinhoff with a period in which it can concentrate on reducing debt and restoring value.

Remediation Plan: During the previous Reporting Period, the Management Board developed a Remediation Plan containing a wide range of measures to limit the possible recurrence within the Group of irregularities and instances of non-compliance with laws and regulations.
       Significant further progress was made with the implementation of these remedial actions during the Reporting Period, with work concentrated on the completion of improvements to policies and procedures in respect of financial accounting, conflict of interest and supplier and contract management. Please refer to the Risk Management section of the Report of the Management Board for more information.
       The Remediation Plan will remain an area of focus throughout the 2020 Financial Year.

Litigation: Litigation remains a significant outstanding challenge for the Group. It has been a major focus for management in the period since implementation of the financial restructuring in August 2019. In parallel with these various court processes, the Management Board, assisted by a litigation committee and the Group’s legal advisors, continues to work towards a resolution of outstanding claims against the Group.
       In parallel, the Company is also evaluating potential claims we may have against third parties, and recoveries against implicated entities and individuals have been, and will continue to be, initiated where appropriate.

 

HomeChoice: Trading update, dividend cancelled

Cape Town, W Cape, SA (July 03, 2020) - Shareholders are referred to the announcement released on the Stock Exchange News Service (“SENS”) on 16 April 2020, which provided an update on the impact of Covid-19 and the national lockdown in South Africa on the Group and the postponement of the final dividend for the year ended 31 December 2019. The national lockdown has had a significant impact on demand in the retail business with an immediate slowdown in sales following the governments first announcement relating to the Covid-19 virus. The retail business, as an omni channel retailer, has seen significant growth in its digital channels of over 50% in the second quarter. However, the call centre was operating on much reduced staff and the showrooms were closed entirely during the lockdown. As a result, despite strong digital sales, the retail business has experienced a reduction in overall sales in the first half compared to the same period last year.
       Loan disbursements in the financial services business were significantly curtailed from the end of March 2020 to defensively preserve cash. Credit granting criteria have been tightened to manage credit risk, but it is anticipated that credit impairment costs will increase. The 275 basis point cuts to the Repo rate since January 2020 have further impacted revenues, with the rate now at a 50-year low. The management team continues to drive action plans to manage risk during this period and to mitigate the negative impact of the pandemic and national lockdown. The health and wellbeing of our staff and customers is paramount and considerable effort has gone into ensuring that our operations conform to the highest levels of hygiene and safety protocols. Our contact centre is now fully operational, while many support staff continue to work from home. We appreciate the commitment of our people to the Group during this uncertain and ever- changing environment.
       The Group liquidity and capital position has been proactively managed during this period, through tight management of working capital, aggressively reducing costs, reviewing and deferring non-critical capital expenditure and focusing on collections from the debtors books. Additionally, the Group concluded a refinance and upsize of existing commercial bank debt facilities to provide for operational requirements and to improve liquidity.

Trading statement: Given the impact of the national lockdown over the first six months of the current reporting period, shareholders are advised that earnings per share (EPS) and headline earnings per share (HEPS) for the six months ending 30 June 2020 are expected to be more than 20% (45.98 cents) lower than the reported EPS and HEPS of 229.9 cents for the comparable period in the prior year. As soon as the Company has more certainty around expected EPS and HEPS for the six months ending 30 June 2020, a further trading statement will be released.

Cancellation of year-end dividend: As the impact and extent of the continued lockdown has become clearer, and in the interest of conserving cash to ensure the continued financial health of the group, the board of HIL, in consultation with its legal advisers, has resolved to cancel the final dividend of 79.0 cents per share (amounting to R83.2 million) declared in the announcement released on SENS on 12 March 2020. The timetable pertaining to the initial declaration of the final dividend was retracted in the announcement released on SENS on April 2020 and, accordingly, will not be updated or replaced. The Group’s financial results for the six months to 30 June 2020 will be released SENS on or about 31 August 2020. Any forecast financial information contained in this announcement has not been reviewed or reported on by the Company’s external auditors.

 

Competition Tribunal hears Senwesbel, Senwes bid to acquire Suidwes

Pretoria, Gauteng, SA - The Competition Tribunal last week heard the large merger proceedings whereby Senwesbel Ltd (Senwesbel) and its subsidiary, Senwes Ltd (Senwes), intend to acquire the entire issued share capital of Suidwes Holdings (Ring Fenced) (Pty) Ltd (Suidwes) through a scheme of arrangement in terms of section 114 of the Companies Act 2008. Post-merger, Senwes will exercise sole control over Suidwes.

  The parties: The primary acquiring firms are Senwesbel and its subsidiary, Senwes. Having serviced the agriculture industry since 1909, it is one of the largest agricultural businesses in South Africa. Its main activities include grain handling and storage, financing, grain trading, grain transport, equipment sales, agricultural retail stores, insurance, agriculture inputs and agriculture services. It supplies its products largely to commercial farmers, millers and oil seed processors and traders. It operates mainly in the Free State, Gauteng and North West provinces.
       Suidwes, a 111-year-old agricultural company, is a private company. Most of the shareholding in it is held by farmers. Suidwes controls several firms including Suidwes Investments (Pty) Ltd, Suidwes Agriculture (Pty) Ltd and Africum Ltd. Its business activities include grain storage and handling, grain trading, retail outlets, financing and agricultural services, among others.

  Commission’s assessment and recommendation: In its initial assessment of the proposed transaction, the Commission invited the merging parties to submit remedies that could alleviate competition and public interest concerns arising from the proposed merger. The merging parties put forward proposed remedies. The Commission initially considered the proposed conditions to address the competition and public interest concerns and recommended that the merger be approved subject to the conditions. It has since altered its view on the conditions proposed.

 

Death

Johannesburg, Gauteng, SA - Athan 'Saki' Baranos, managing member of leather goods manufacturer E. Baranos Leather Manufacturers, died on June 28 of the Covid-19 virus. An obituary will be carried in the July issue of S&V Footwear & Leather Goods later this week.

 

Movement

Durban, KZN, SA - Former KZN agent Campbell Nel has returned to the footwear industry as the KZN agent for Skechers, offering the full range of from casual sneakers to formal leather footwear. - +27 (0)84 569 6840, CampbellN@live.com

 

They Said It

"We no longer focus on sneakers as this is an import business. We now only work with factories in SA, which has been a great move." - Jarod Grossberg, director of sourcing company Geestep.

"I don't think anyone's looking for a fight." - Anonymous participant in this year's National Bargaining Council wage negotiations.

 

Got anything you'd like to share?

Do you have any suggestions, comments or experiences about the lockdown that you'd like to share with the industry? We will publish the throughout the lockdown, so please let us know. - tony@svmag.co.za

 

Exchange rates

1. SA Rand (ZAR)

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

 
  Euro € GBP £ US $ Yuan Renminbi ¥
2020/01/04 R15.97 R18.71 R14.31 R2.05
2020/01/11 R15.97 R18.76 R14.36 R2.07
2020/01/18 R16.04 R14.47 R14.47 R2.10
2020/01/25 R15.87 R18.82 R14.39 R2.07
2020/02/01 R16.54 R19.81 R15.00 R2.16
2020/02/08 R16.48 R19.41 R15.06 R2.15
2020/02/17 R16.16 R19.44 R14.90 R2.13
2020/02/22 R16.27 R19.43 R15.00 R2.13
2020/02/29 R17.27 R20.08 R15.66 R2.24
2020/03/07 R17.69 R20.44 R15.67 R2.26
2020/03/14 R18.04 R19.94 R16.25 R2.32
2020/03/21 R18.92 R20.50 R17.60 R2.48
2020/03/28 R19.63 R21.93 R17.61 R2.48
2020/04/04 R20.58 R23.37 R19.03 R2.68
2020/04/11 R19.70 R22.43 R18.01 R2.56
2020/04/18 R20.43 R23.49 R18.79 R2.65
2020/04/25 R20.59 R23.53 R19.02 R2.68
2020/04/30 R20.24 R23.27 R18.51 R2.62
2020/05/09 R19.89 R22.69 R18.29 R2.58
2020/05/16 R20.11 R22.49 R18.58 R2.61
2020/05/23 R19.24 R21.47 R17.64 R2.47
2020/05/30 R19.48 R21.67 R17.54 R2.45
2020/06/06 R18.93 R21.28 R16.77 R2.37
2020/06/13 R19.19 R21.39 R17.06 R2.40
2020/06/20 R19.37 R21.28 R17.25 R2.43
2020/06/27 R19.35 R21.28 R17.25 R2.43
2020/07/04 R19.14 R21.24 R17.01 R2.40
Note: For previous rates, see HERE

2. Zambian Kwacha (ZK)

Source: https://www.xe.com/currencyconverter/

 
  Euro € GBP £ US $ Yuan Renminbi ¥
2020/06/20 ZK20.39 ZK22.53 ZK18.24 ZK2.58
2020/06/27 ZK20.48 ZK22.52 ZK18.25 ZK2.57
2020/07/04 ZK20.24 ZK22.46 ZK17.99 ZK2.54


3. Zimbabwean Dollar (Z$)

Source: https://www.xe.com/currencyconverter/

 
  Euro € GBP £ US $ Yuan Renminbi ¥
2020/06/20 Z$405.54 Z$446.91 Z$361.90 Z$51.17
2020/06/27 Z$405.98 Z$446.46 Z$361.90 Z$51.13
2020/07/04 Z$407.08 Z$451.78 Z$361.90 Z$51.21

 

 

 

ABSA Agri Trends: Hides & skins prices

Johannesburg, Gauteng, SA (July 01, 2020) - The current average hide price decreased by 3.5% to R0.69/kg from R0.70/kg green a week ago. The current price, however, is 5.7% higher than the average price a month ago and is 58.2% lower than the average price a year ago. The local hide industry is expected to remain under pressure for the next few months. NB* Hide prices are determined as the average of the RMAA (Red Meat Abattoir Association) prices and prices of independent companies. - Abrie Rautenbach, head Absa agribusiness, and Conce Moraba, agricultural economist, Absa group.

Hide & skin price progression
Date Hides/Kg Dorper/Skin Merino Skin
2020/01/03 1.38 35.00 46.67
2020/01/10 1.42 28.69 45.71
2020/01/17 1.35 30.74 45.71
2020/01/24 1.39 33.75 48.14
2020/02/07 1.36 33.47 47.50
2020/02/14 1.36 33.75 47.50
2020/02/21 1.32 33.75 47.50
2020/02/28 1.29 37.22 43.89
2020/03/06 1.29 36.50 43.50
2020/03/13 1.31 36.00 43.50
2020/03/27 0.93 37.22 48.33
2020/04/03 0.92 37.78 47.36
2020/04/10 0.89 35.63 42.22
2020/04/17 0.88 39.38 41.25
2020/04/24 0.89 33.82 43.33
2020/05/01 0.82 34.55 46.88
2020/05/08 0.82 32.10 43.33
2020/05/18 0.77 32.10 43.33
Note: For previous prices, see HERE
 

  

06/07/1974: Gary Gilder, formerly Bolton Footwear, Cape Town.
07/07/1955: John Kotze, Designer Marketing Int. Johannesburg.
07/07/1959: Lenette van Vuuren, Incredible Shoes, Ladysmith.
07/07/1965: Anil Rupnarain, Michelle Footwear, Durban.
08/07/1950: Sam Muller, BEC Safety, Port Elizabeth.
09/07/1942: Cecil Fenwick, Saddler Belts & Leathercraft, Durban.
09/07/1949: Bryn Proctor, ?, formerly Crown Footwear, Pinetown.
09/07/1958: Johan Kriel, retired, formerly Bolton Footwear, Great Brak River.
09/07/1969: Hein Jonker, Ostrich Products SA.
09/07/1975: Gian-Paolo Bresolin, left the industry, formerly Andreoli Shoes [closed], Pinetown.
10/07/1940: Erwin Metzger, Sanata Footwear, Durban.
10/07/1945: Colin Symons, retired, formerly Elco Plastics, Cape Town.
10/07/1970: Shelley Zhang, left the country, formerly Lavanda Shoes, Randburg.
10/07/1972: Annah-Mae Blair, The New Shoe Company, Durban.
10/07/1976: Johan Venter, Rolfes Leather, Boksburg.
11/07/1945: Maureen Liebenberg, retired, formerly Barker Footwear, Cape Town.
11/07/1964: Hafiza Shaikh, left the industry, formerly Amshu Distributors (closed), Greytown.
11/07/1975: Cassim Dawjee, Moola’s Fashion House, Newcastle.
12/07/1970: Guy Blake, agent, Cape Town.

 

In Memoriam this week

06/07/1996: Eric Waterworth, King Tanning Company [closed], Pietermaritzburg.
07/07/1993: Rob Scallan, Tuftex, Port Elizabeth.
09/07/2015: Mahomed Ebrahim Haffejee (b.18/08/1930), Capri Bag, Durban.
10/07/2002: Rodger Brewitt (b. 25/11/1947), Bata Zimbabwe/Futura Footwear, Port Shepstone.
10/07/2014: Terry Thomas (b. 12/05/1935), agent, Durban.
12/07/2015: Hessen Bernado (b. 19/07/1959), Bagshaw Footwear, 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:
Chic Shoetique, Somerset West, W Cape, SA. Women's footwear.
Chicanos Outfitters, Cape Town, W Cape, SA. Men's outfitter.

 


Classified Adverts

THRIVING RETAIL BUSINESS FOR SALE IN KLERKSDORP

Ramjee's Shoe Store, an up-market, reputable and well-established Footwear and Men's Clothing outlet in an incredible location (between 2 Taxi ranks). Well stocked and with a fully trained team. Serves a host of discerning clients, locally and regionally.

Full turnover and inventory figures will be provided on request.

Owner retiring after 40 years of highly profitable trade.

Enquiries: Email kokila.ranchhod@gmail.com or call Bharat 018 462 8211.




LUCRATIVE BUSINESS FOR SALE – DURBANVILLE – WESTERN CAPE

This business was established in 2007 and is an operational going concern. The Business has a loyal and large customer base in the WC and other provinces and offer excellent and affordable Hunting and Game skins products to the general public and commercial Wholesale/Retail trade.
Currently the only business in the Western Cape that tans hides, both commercial and game, with huge growth potential at competitive pricing.
Excellent earnings potential as business has not reached its full growth potential yet. Growth exists in expanding to larger client bases nationally and exploiting the International/export market.
We have well trained staff with more than 14 years in the industry.  Email me for pictures and more detailed information if you are interested.
Enquires : Call JB SMUTS   0827383083  or   E –Mail    gameskinsafari@telkomsa.net




  

Contact us

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

Next newsletter: July 13, 2020.

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

Should you wish to subscribe email tony@svmag.co.za
Our website www.svmag.co.za

 

 

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