S&V Weekly Newsletter Vol.6 No.35, Aug 31, 2020

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Busby confident it will come out of business rescue by end October

Johannesburg, Gauteng, SA – Retailer and wholesaler The New House of Busby, which went into voluntary business rescue on July 30, expects to have completed the planning for its restructuring by the end of September, which would allow it to come out of business rescue by the end of October, CEO Bernard Mostert said on Saturday.
       Of the reaction by the group's creditors, who are owed R360 million, he said: "It's not an optimal situation for them, of course, but we've had nothing but co-operation from them, and many of them have walked a long way with Busby. You get to see the quality of your relationships with suppliers at a time like this."
       He said there was "no reason" why the restructuring, which includes dividing Busby into a number of separate legal entities to protect individual brands from "cross contagion" in the current economic climate, shouldn't work.

Retail

Malawi

No longer a viable model, maybe something new next year

By Vikesh Vanzara, MD, Vanzara Bros, family footwear, 1 store.
Blantyre, Malawi – I regret to inform you that I closed down my shop at the end of June this year after a long battle over the years in anticipation that things would improve. The retail clothing and footwear trade is a dying trade because of a variety of factors, namely second hand clothing and footwear, online trading, factory shops and outlets, manufacturers  selling direct to corporates and the public, street vending and door-to-door suppliers. Customers hardly come to shop.
       Also a major reason was the lack of a good and reliable supply chain as it used to be in the past. Now it's all imports from China.
       Operating costs and overheads are going up and sales volumes are going down. Now at the age of 60, I have no energy to run around and compete with the young generation.
       God willing I might start something in 2021.

Namibia

Ticking over

Crocs, family footwear, 1 store.
Windhoek, Namibia – Business is "a little bit quiet", manager Charlotte Strauss said, but the store still sells a few pairs every day. She said the business had started its own Facebook page to promote itself.

South Africa

Hoping formal will pick up

G-10 Exclusive Wear, men's outfitter, 1 store.
Johannesburg, Gauteng, SA – Business was quiet, director Jeetan Narotam said. "There's movement on lay-byes, but not much else."
       He said he was putting a lot of stock - mostly formal - on sale to generate cash flow.
       "Formal wear was worse hit by the lockdown," he said. "Now that people are going back to work and to church and so on, hopefully it will pick up."

Time to bring back Cape clothing factories

Jane's Drapers, men's and women's outfitter, men's shoes, 1 store.
Cape Town, W. Cape, SA  – The entire clothing value chain - manufacturers, importers, retailers and consumers - had been hit by the lockdown, partner Sedick Crombie said.
       "We didn't receive our orders from some of our importer suppliers, and some of them have since closed down. Coupled to that, many of our customers have lost their jobs or have had their income reduced," he said.
       "We've kept our heads above water, mainly because we own our own building and we've been able to pay our other fixed costs, but otherwise I don't know if we'd have survived.
       "Business is always unpredictable, but this year more than ever."
       He said it was time to resurrect Cape Town's clothing industry. "The imports killed it, and now that they have the market, their goods aren't so cheap anymore. I think the potential exists for a local clothing industry again, although of course the textile industry has also disappeared."
       On the shoe side, he said Jane's now only stocked men's footwear. "We used to sell women's shoes. We used to buy boxes and boxes from Durata, but they've gone, too."

Swaziland

Summer ranges are late

Paramount Tailors & Outfitters, men's outfitter, 1 store.
Manzini, Swaziland  – There was an initial rush when clothing stores reopened in June, director Mitesh Valob said, but that was principally because customers were concerned about their lay-byes. Since then, he said business had been slow, and August had been "very quiet".
       "People are unsure at the moment, and it affects business. Also, alcohol sales were banned here at the beginning of July, and we'll only know today (Monday) whether they will be reopening. The lockdown has caused a domino effect on business."
       He said suppliers who didn't have their summer ranges ready early in the year had been unable to complete them, and he was being shown incomplete ranges.
       "I'm doing some buying, but generally I'm holding back."

Zimbabwe

New foreign currency auction initiative to help SME's

Sheeva Footwear, retailer, repairer, custom leather goods and footwear manufacturer, 1 store.
Harare, Zimbabwe  – All aspects of Sheeva's business are "depressed", director Vadi Parmar said.
        "The main part of our business at the moment is repairing, but that has slowed down by 50%," he said.
       "We're currently manufacturing one-off custom leather goods and footwear only."
       "On the finished goods side, we are trying to keep stock levels as high as possible."
       He said Sheeva sourced 70% of its finished goods locally, and the rest were imported goods. "Government has introduced a new foreign currency auction system for smaller importers which will definitely help," he said. "Initially companies were allowed to bid from US$50,000 upwards. The bidding amount has now been revised from US$2500.00 upwards, which is a lot more realistic for small to medium enterprises.
       "Other than that, we just hope for the best and look forward to the Covid 19 pandemic lockdown regulations to be reviewed so we can get back to normal."

Finance

Stock Exchange News Service (SENS)

HomeChoice - updated trading statement

Cape Town, W. Cape, SA (August 25, 2020) – Shareholders are referred to the announcement released on the Stock Exchange News Service (SENS) on 3 July 2020, which provided an update on the impact on the Group of the Covid-19 pandemic and the national lockdown in South Africa.
       As previously reported, the extremely difficult trading conditions over the first half of the financial year brought about by Covid-19 have had a significant impact on the results of the Group. As a result, despite strong digital sales, the retail business experienced a reduction in overall sales in the first half of the financial year compared to the same period last year. Loan disbursements in the financial services business were also significantly curtailed from the end of March 2020 to defensively preserve cash and manage credit risk. The 275 basis point cuts to the Repo rate since January 2020 further impacted revenues, with the rate now at a 50-year low.
       As a result, total Group revenue for the six months ended 30 June 2020 declined by 4.9% overall, with total retail revenues declining 10% and groupwide finance income earned reducing by 0.9% when compared to the same period last year.
       The Group’s liquidity and capital position has been proactively managed during this time through the tight management of working capital, aggressively reducing costs, reviewing and deferring non-critical capital expenditure and focusing on collections from the debtor books. As a result, the closing cash position for the six months ended 30 June2020 is strong at R379m compared to R121m for the six months ended 30 June 2019. Further, the Group concluded a refinance and upsize of existing commercial bank debt facilities to provide for operational requirements and to improve liquidity.
       Shareholders were advised in the announcement released on SENS on 3 July 2020 that earnings per share (EPS) and headline earnings per share (HEPS) for the six months ended 30 June 2020 were 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.
       The Group has reasonable certainty that EPS and HEPS for the six months ended 30 June 2020 will range between 100 cents to 110 cents, or between 57% and 52%, lower than the corresponding period.
       The Group’s financial results for the six months to 30 June 2020 will be released via SENS on 31 August 2020. Any estimated financial information contained in this announcement has not been reviewed or reported on by the Company’s external auditors.

Steinhoff International Holdings

Extracts from the quarterly update for the 9 months ended June 30, 2020
Stellenbosch, W. Cape, SA – Pepkor Africa has the largest retail store footprint in southern Africa, with more than 5 500 stores operating across 11 African countries. The majority of its retail brands operate in the discount and value segment of the market. For more information visit www.pepkor.co.za.
       The Pepkor Africa Group’s revenue for the nine months ended 30 June 2020 decreased by 10% to €2 965 million. This compares to a 2% reduction in revenue in constant currency, reflecting the deterioration in the exchange rate over this period. In addition, the impact of COVID-19 and the national lockdown constrained sales during the third quarter, resulting in revenue reducing by 17% in constant currency during that period.
       It is estimated that the national lockdown period resulted in lost revenue of approximately €285 million for the Pepkor Africa Group. Very strong trade was achieved during May and June 2020 as lockdown measures eased, and this can be attributed to pent up demand and the positive impact of social grant payments, as well as the value focus and market positioning of the group’s brands.
       The clothing and general merchandise segment reported a decrease in revenue of 2% for the ninemonth period, negatively impacted by a decrease in revenue of 16% during the third quarter, both measured in constant currency.
       Sales levels for PEP and Ackermans were positive during May and June 2020 after stores reopened. Trading was resilient due to the defensive discount and value market positioning, with consumers prioritising apparel spending in areas such as babies’ and children’s clothing and focusing on basic and replenishment products. The national lockdown regulations also impacted on the reopening of schools, which resulted in weak back-to-school trading.
       For the nine-month period the PEP and Ackermans brands, in aggregate, reported a slight decrease in sales in constant currency with a decrease in likefor-like sales of 4%. Retail space expanded by 3% year-on-year with 22 new store openings during the third quarter.
       By comparison, its European operations, variety retailer Pepco Group, increased revenue by 2% to €2 611 million, and furniture retailer Conforma dropped 18% to €566 million. Its Australian and New Zealand retailer and manufacturer of household goods, Greenlit Brands, dropped 1% to €489 million, its Swiss furniture retailer Lipo dropped 65% to €6 million, and its US bed retailer, Mattress Firm, increased sales by 7% to €2 035 million.

Movements

Pietermaritzburg, KZN, SA – Dick Whittington Shoes MD Arveen Boodhoo has confirmed that former Bolton Footwear Great Brak River/Oudtshoorn COO Francois Strydom has joined as COO on a short term contract "whilst I am operating from home".

Durban, KZN, SA – Former Michelle Footwear director Jonathan Colloty has left the business as "part of a restructuring".

They Said It

"It depends on how extravagant your parents were when they registered you." - SA Taxidermy & Tannery Association secretary Susan Swart on the spelling of given names. Her Christian name should be pronounced the Afrikaans way, with an emphasis on the second syllable, but growing up in KZN, she got used to being an English Susan.

"I don't do much selling these days...more cooking the books and rubbing the crystal ball." - Malome Leathers' Sam Wells on the role of older staff in the Covid era.

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/

ABSA Agri Trends: Hides & skins prices

Johannesburg, Gauteng, SA (August 21, 2020) - The average price of hide increased 6.1% to R0.61/kg from last week. The current price is 10.7% lower than the price a month ago and 61.3% lower than the price a year ago. NB* Hide prices are determined by the average of the RMAA (Red Meat Abattoir Association) and independent companies. - Abrie Rautenbach, head Absa agribusiness, and Conce Moraba, agricultural economist, Absa group.

01/09/1941: Stan Kotkin, retired, formerly Footwear Trading (ceased trading), Johannesburg.
01/09/1942: Judy Vincent, Saddler Belts & Leathercraft, Durban.
01/09/1971: Antonella Florio, Vanity, Ladybrand.
02/09/1941: Saag Jonker, Ostrich Products SA, Oudtshoorn.
02/09/1953: Carlos Costa, Superior Footwear/Imponente Tanning, Harare, resident in Australia.
02/09/1960: Arveen Boodhoo, Dick Whittington Shoes, Pietermaritzburg.
02/09/1952: Derek Ellway, formerly Inspectashoe [closed], Cape Town, now in the UK.
02/09/1963: Sunil Daya, Randy’s Agency, Port Elizabeth.
03/09/1953: Vic Jablowski, Protech V, Pinetown.
03/09/1970: Michel Hasson, Topaz, Cape Town.
04/09/1952: Julian Pledger, left the industry, formerly Faith Footwear [closed], Port Elizabeth.
04/09/1955: David Scott, exporter, Pinetown.
04/09/1963: Peter Crouch, Crouch Footwear, Pietermaritzburg.
04/09/1992: Sarah Hayze-Hill, Chillisource, Durban.
05/09/1954: Abdul Samad, Bob’s Shoe Centre, Johannesburg.
05/09/1989: Erlank van Zyl, Ostriland, Citrusdal.
06/09/1951: Abdur Rahim 'Raymie' Bava, A.R. Bava & Co., Polokwane, Limpopo, SA.
06/09/1957: Yusuf Bhabha, Shoe Boutique, Secunda.
06/09/1953: Tony Stottelaar, Leather Systems SA, Port Elizabeth.

In Memoriam this week

01/09/2012: Mike Cromhout (b. 06/02/1947), agent, Cape Town.
02/09/2018: Sid Finlayson (b. 07/01/1939), Bata Zimbabwe, Futura Footwear and Bolton Footwear, Mossel Bay.
03/09/2005: Oliver Guibert (b. 23/12/?), Bata Zimbabwe.
04/09/2012: Judi Moakes (b. 13/04/1960), in Northampton, formerly secretary, SLTC (SA Section).

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:
City Rock, Cape Town, W. Cape, SA. Specialist climbing, bouldering, camping, hiking and trail running retailer. Civic Outfitters, Boksburg, Gauteng, SA. Men's outfitter.

Contact us

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

Next newsletter: September 6, 2020.

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