S&V Weekly Newsletter Vol.6 No.45, Nov 9, 2020

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Business

South Africa

'The Scottish Group: Wholesale shut, retail 'plans to continue'

Johannesburg, Gauteng, SA – The wholesale division of The Scottish Group, which distributed Ben Sherman Original, Cloth & Label, Over The Moon, Palladium Boots, Pringle of Scotland, and ToePorn, has been closed and all stock sold, CEO Rory Scott said this morning.
      The retail division, which currently has 13 Pringle, 3 Palladium and 3 outlet stores, is still trading, and will present its recovery plan to creditors in the last week of November or the first week of December, he said.
      He said secured creditors of the wholesale division would be paid from the proceeds of the sale of the stock, but that unsecured creditors - mainly its suppliers - would receive nothing.
      Both divisions went into business rescue on June 15.

'Business would have to improve for me to go back into shoes'

Mandy's Dress Shop, women's boutique, 1 store.
Johannesburg, Gauteng, SA – The flow of loyal customers has improved, proprietor Angie Alves said, although people weren't all necessarily buying. Mandy's has been in the small centre for 30 years, and with the pharmacy and restaurant, is a destination store, but she said overall the centre is "shocking", with a high number of empty shops.
      Mandy's got out of footwear several years ago because the prices were "ridiculous".
      "A woman wears a different set of clothes each day, but she can wear the same pair of shoes for 3 or 4 days in a week.
      "Shoes used to work because the prices worked," she said. "The situation would have to change dramatically for me to go back into footwear - business would have to be booming, the prices would have to be good, and I would have to be able to buy the size curve I want."
      She does stock synthetic handbags on consignment, "and it's a good accessory to have".

'People are getting on with their lives'

MC Ghoor Stores (Pty) Ltd, department store, 1 store.
Vryburg, N.W. Province, SA – There was a spike in business when the lockdown ended, then business went back to more-or-less normal, director Muhammad Ghoor said. "Now it's consistent and not too bad. People are getting on with their lives. I think it helps that we're in a rural area, relatively far away from the pandemic. We have to keep overheads down and maintain cash flow, but otherwise it's okay."

Zimbabwe

Back in production after 6 months

Eagle Italian Leather & Shoes, tannery, shoe manufacturer, uniform manufacturer.
Marondera – After being closed for 6 months, Eagle Italian reopened in mid-October, director Franco Marconati said.
      The business supplies military boots and uniforms to the defence forces of Zimbabwe, Angola, Namibia and Tanzania, and also tans its own leather.
      He said the company was fairly busy, but that there still remained problems with crossing some international borders.

SAFLIA annual report

Umhlanga, KZN, SA – SAFLIA's 2020 annual report has been completed, executive director Jirka Vymetal said last week, but it is awaiting ratification from members at the upcoming AGM before general distribution.

Stock Exchange News Service (SENS)

AVI - chairman’s comment on trading conditions

Johannesburg, Gauteng, SA (November 05, 2020) – At the annual general meeting of AVI held this morning, Gavin Tipper provided an update on trading conditions.
      Group revenue for the first quarter ended September 2020 increased by 3,6% over the same period in the prior year. Growth in most of our food and beverage categories was partially offset by the continued impact of COVID-19 on sales volumes in the fashion businesses and the Ciro out-of-home coffee solutions business. Notwithstanding improvements over the quarter, revenue in the fashion businesses was 87% of that achieved in the first quarter of last year, and improved further in October. The consolidated gross profit margin decreased largely due to cost pressures from the weaker Rand but consequent selling price increases should contribute to an improvement over the remainder of the year. Selling and administrative costs were tightly managed, resulting in growth in operating profit for the quarter of 0,5%. Results for the remainder of the 2021 financial year are materially dependent on sound consumer demand over the festive season, and through the second semester, for our food and beverage brands, and continued improvement in demand for our fashion brands.
      The information above has not been reviewed and reported on by the Group’s auditors.

Truworths: Business update

Cape Town, W. Cape, SA (November 05, 2020) – Truworths announced that retail sales for the first 18 trading weeks (29 June 2020 to 1 November 2020) of the 2021 financial period (‘the current period’) decreased by 10% to R5.7 billion compared to the first 18 trading weeks (1 July 2019 to 3 November 2019) of the 2020 financial period (‘the prior period’). Both of the Group’s main markets, South Africa and the UK, continue to be affected materially by the impact of the COVID-19 pandemic. While lockdown restrictions in South Africa have been relaxed gradually over the last five months, the UK is entering a second national lockdown from today until Wednesday, 2 December 2020 as the second wave of the pandemic is starting to be experienced in the northern hemisphere. In terms of the restrictions the Group’s stores across the UK are classified as non-essential retail and accordingly will only be open for ‘click & collect’ transactions during this lockdown.
      In the current period, account sales comprised 50% (2020: 52%) of Group retail sales, with account sales decreasing by 13% and cash sales decreasing by 7% relative to the prior period.
      Retail sales for Truworths Africa (being the Group, excluding the UK-based Office segment and comprising mainly of the Truworths businesses in South Africa) decreased by 9% to R4.2 billion relative to the prior period’s R4.6 billion. Account sales comprised 69% of these retail sales (2020: 71%). Truworths’ trading space decreased by 0.5% on the prior period and is expected to remain largely unchanged for the full 2021 financial period. Product inflation averaged 0.2% for the current period (2020: 0.4%).
      Retail sales for the Group’s UK-based Office segment decreased in Sterling terms by 26% to £70 million relative to the prior period’s £95 million. In Rand terms retail sales for Office decreased by 12% to R1.5 billion. Office continues to benefit from its strong e-commerce offering with e-commerce sales growing by 22% in the current period to comprise 52% of total retail sales. Office’s trading space decreased by 11.5% compared to the prior period and is expected to decrease by approximately 20% for the full 2021 financial period as the business continues to exit unprofitable stores as leases expire or lease breaks become available.
      Truworths Africa’s gross trade receivables at 25 October 2020 decreased by 15% to R5.0 billion compared to R5.9 billion at 27 October 2019. The number of active accounts decreased by 6%. The percentage of active account holders able to purchase and overdue balances as a percentage of gross trade receivables were at 83% (2020: 85%) and 15% (2020: 13%), respectively. While gross bad debt in respect of the book is increasing, the overall quality of the book is showing signs of improvement and the allowance for expected credit losses is starting to reduce.
      Although the trading environment is expected to remain challenging in light of the COVID-19 pandemic, Brexit uncertainty and a weak economic backdrop generally, the Group continues to utilise its extensive experience to manage the risk of fashion through its proven merchandise design and buying processes, and to manage the risk of the book through continuing to apply strategies to ensure the on-going health of the portfolio.

The Group’s interim results for the 26-week period ending 27 December 2020 are scheduled for release on or about Thursday, 18 February 2021.

TFG interim results September 2020

Cape Town, W. Cape, SA (November 05, 2020) – Revenue for the interim period decreased to R13.862 billion (2019: R18.568 billion), gross profit lowered to R5.664 billion (2019: R9.027 billion), profit for the period attributable to equity holders of TFG weakened to R416.3 million (2019: R1.233 billion), while headline loss per ordinary share was recorded at 91 cents per share (2019: headline earnings of 531.2 cents per share).

Interim ordinary dividend announcement: In light of the current subdued economic environment and the heightened levels of uncertainty posed by COVID-19, the Supervisory Board has decided that it would be prudent not to declare an interim ordinary dividend at this period-end (Sept 2019: 335 cents per share). Dividends will be resumed when appropriate to do so.

Preference dividend announcement: Dividend number 168 of 3.25% (6.5 cents per share) (gross) in respect of the six months ending 31 March 2021 has been declared from income reserves, payable on Monday, 15 March 2021 to holders of 6.5% preference shares recorded in the books of the company at the close of business on Friday, 12 March 2021.

Company outlook: The outlook for trading conditions remain uncertain as consumer confidence remains under pressure and further lockdowns as a result of the second wave of COVID-19 infections have already been experienced in TFG Australia and are currently being experienced in TFG London.
      As previously communicated, the impact of the COVID-19 pandemic on our 2021 financial year is expected to be significant across all territories, the extent of which is difficult to predict with accuracy. Any re-introduction of significant lockdowns and store closures across our three business segments would have a further material and negative impact on our business and results of operations in our 2021 financial year.
      We are however confident that the Group is well positioned to take advantage of any economic recovery and that our continued investment in our brands, digital transformation initiatives, e-commerce platforms and vertical quick response supply chain capacity, will continue to benefit the Group.

Mr Price - trading statement

Durban, KZN, SA (November 04, 2020) – The group is currently finalising its interim financial results for the 26 weeks ended 26 September 2020. These results will be announced on the Stock Exchange News Service on or about Thursday, 26 November 2020.
      Following the trading statement published on 20 August 2020, shareholders are further advised that headline earnings per share is likely to be between 23% and 28% lower than that reported for the previous corresponding reporting period, as reflected in the table below.

Earnings impact: The closure of all the group’s South African stores during the nation-wide lockdown between 27 March 2020 and 30 April 2020, and the subsequent trade restrictions due to COVID-19, has had a material impact on the group’s earnings. During the month of April 2020, the group estimates that it lost approximately R1.8bn in sales. Despite stores being permitted to trade from May 2020, the group was further negatively impacted as its full assortment of merchandise was not permitted to be sold until 1 June 2020.
      As a result, the group advises that it expects the interim financial results for the 26 weeks ended 26 September 2020 to fall within the following ranges:
Expected interim 26/09/2020 cents
Basic earnings per share: 275.0 to 297.2
Basic headline earnings per share : 319.1 to 341.3

Following a detailed review, impairments of R153.4m were recognised, relating to IT assets and right-of-use-assets (store leases). These impairment charges were included in basic earnings per share but are added back for the calculation of headline earnings per share. The current economic conditions have required an increase in the impairment of the group debtors’ book to 15.2%. Cash continues to be the favoured tender type, accounting for 86.0% of total sales. The group achieved its target of double-digit declines in inventory on hand in H1 FY21, which has been adequately provided for.

Interim results presentation: A live webcast of the interim results presentation is scheduled for 09:00 am on or about 26 November 2020. This can be accessed through the following link: https://www.corpcam.com/MrPrice26112020

They Said It

"Keeping the flag flying." - Facilitator Voden Wearne of Oden on how he's doing.

"As an agent in the footwear business, every season you start a new business." - Former footwear agent Johnny Rodinis on the challenges of selling new products, often to new customers. He currently owns a garage which has also been affected by Covid. From a pre-pandemic average of 400 000 litres per month, sales dropped to 98 000 during hard lockdown and grew to 290 000 last month. He said this month had started well. Even more encouraging: He's expecting another big price drop next month.

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

ABSA Agri Trends: Hides & skins prices

Johannesburg, Gauteng, SA (November 02, 2020) - The current average hide price increased by 4.9% to R2.16/kg from R2.06/kg green a week ago. The current price is 58.8% higher than the average price a month ago and is 31.3% higher than the average price a year ago.
      Industry players are receiving prices between R2.00/kg and R3.00/kg depending on the quality of the hide. The global hide market has seen an improvement in hide prices due to an improvement in the upholstery sector as people perform home improvements and home décor with a big push for leather upholstery.  Current demand for hides is exceeding the supply which is adding support to prices.
      Expectations among industry members is that prices will continue to see an improvement in the coming months until reaching a more sustainable level where prices will then likely hold. NB* Hide prices are determined by the average of the RMAA (Red Meat Abattoir Association) and independent companies. - Abrie Rautenbach, head Absa agribusiness, and Paige Bowen, agricultural economist, Absa group.

09/11/1938: Johnny Makrides, Intershu Distributors, Johannesburg.
09/11/1963: Sanjay Pattundeen, Caprini Footwear, Durban.
09/11/1972: Chrisi Janse van Vuuren, Chrisi Artwear, Harrismith.
09/11/1977: Darrell Naidoo, Sidekicks, Alberton.
10/11/1961: Granville Steyn, DyStar Africa, Pietermaritzburg.
11/11/1940: David Chasi, Zambezi Tanners, Bulawayo.
11/11/1941: Brian Gurney, retired, formerly Watson Shoes, Great Brak River.
11/11/1947: Trevor Espey, agent, Cape Town.
11/11/1961: Wayne and Anthony Matthysen, WAM Agencies, Durban/Johannesburg.
11/11/1963: Thammo Schull, Capcorv Recycling, Germiston.
11/11/1964: Jacoba Nel, Conloo Joinery, Welkom.
12/11/1954: Kevin van Staden, retired, formerly Bolton Footwear, Port Elizabeth.
12/11/1966: Bevin Horwitz, agent, Pretoria.
12/11/1981: Gert Kruger, Mossop Western Leather, Cape Town.
13/11/1945: Eckie Schumann, Shoetech, Pinetown.
13/11/????: Indira Singh, retired, formerly Bellstedt, Pinetown.
13/11/1951: William Scalco, LTE, Cape Town.
14/11/1953: Bruce Lynn, emigrated.
14/11/1974: Norman Venks, HW Textiles, Hammarsdale.
14/11/1983: Ximena Farfan, freelance designer, Johannesburg.
15/11/1977: Mario Alves, Unikem Pinetown.
15/11/1971: Michelle Lambert, Freestyle Handmade Originals, Cape Town.
15/11/1971: Marcus Reddy, International Fabric Supplies, Durban.

In Memoriam this week

09/11/2004: Trevor Rink (b. 15/08/1947), Cuthberts/Boyman’s [both closed], Johannesburg.
10/11/2013: Barry Nash (b. 06/09/1952), King Tanning [closed], and Buckman, Port Shepstone.
12/11/1997: Angus Ogilvie, Ogilvie's Shoes [closed], Pietermaritzburg.
14/11/1989: Cyril Fletcher (b. 08/02/1930), Edcon, Johannesburg.
15/11/2002: Jody Woycieh (b. 12/11/1949), Sting Components [closed], Pietermaritzburg.

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:
Corrida Shoes, Pietermaritzburg, KZN, SA. Footwear manufacturer.
Corvari Footwear, Pinetown, KZN, SA. Footwear manufacturer.

Contact us

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

Next newsletter: Nov 16, 2020.

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

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