S&V Weekly Newsletter Vol.7 No.22, May 31 2021
This Newsletter is sponsored by SAFLIA
Please note: Click on any ad to go to the advertiser’s website
Price hikes leading to cancellations, and no end in sight to high shipping costs
Durban, KZN, SA – The rise in component prices and the reluctance of chains to accept price increases, reported last week, has led to cancellations. On Friday, Tego Footwear director Mohamed Vanker said Tego had to cancel about 20 000 pairs of its leather footwear summer orders "because the leather prices have increased for the 4th time in 6 months".
"I sent copies of the cancel orders to my leather suppliers to show them the effects of the increases and the resistance of customers," he said. "After talking to the tanneries yesterday, they say they need help from manufacturers and government."
Referring to an article quoting DTIC Minister Ebrahim Patel and headlined 'R200 billion localisation plan for South Africa - with talk of blocking some imported products', he said "government wants to help but I don’t think they know what’s going on".
"According to the tanners, the hide market is controlled by the export price that they can fetch on the international market. What government need to do is to put a duty on the export of hides, like for example India and Brazil have done. One is only allowed to export processed leather. This will force them to sell hides at lower prices to the local market. This will drastically reduce the price of leather which will automatically create a boost in the motor car seats, footwear and other leather industries. To manufacture leather products, we use a lot of labour, unlike the hide merchants who employ very few. In the 70s and 80s, South Africa had many factories producing leather footwear. Hopefully this can come back if prices drop and we can afford to buy leather and become a strong leather producing footwear industry like India, Brazil, Turkey, etc."
A component supplier said of last week's report: "The story is not complete without a comment on container rates from China to SA which have increase dramatically since Q4 2020 and show no sign of letting up.
Quoting from supply chain advisors Drewry (https://www.drewry.co.uk/), he said: "Rates from Shanghai to Rotterdam (of which Shanghai to Durban is a part) have increased 500% year-on-year. A 20’ FCL from China to Durban today costs $3,500 - $3,900 compared with $800 - $1,000 this time last year. Similarly, a 40’FCL is $6,000 - $7,000 vs. $1,500 - $2,000 last year. For the 5 years up to Q4 2020, container rates have been more or less stable. These increases result in a 5% to 10% increase in the landed cost of components imported from China. There doesn’t appear to be much prospect of an easing in the rates in the next six months.
"Apparently this situation is driven by a shortage of containers due to very strong demand for goods from China (mainly to US) and not enough cargo traffic going the other way, leaving empty containers stranded in the US/Europe and not enough in China.
"This situation will, of course, also negatively affect the cost of importing finished shoes from China to SA."
Stock Exchange News Services (SENS)
Steinhoff liquidation bid to be heard in September
Stellenbosch, W. Cape, SA (May 26, 2021) – Steinhoff International Holdings NV (SIHNV) last week said that the Western Cape Division of the High Court of SA will only hear the bid by the former owners of Tekkie Town to have it liquidated, in September.
The Tekkie Town claimants earlier this month requested their urgent application be heard on May 24. The hearing has been set for September 1-3.
In a second Stock Exchange News Services (SENS) report on Friday, SIHNV said the Amsterdam District Court in the Netherlands, where SIHNV is registered, would hear applications by 2 other claimants against it on June 4. The report read in part:
"Steinhoff International Holdings NV announces that further to the announcement of the court-appointed administrators in the Dutch Suspension of Payments procedure on 23 April 2021, the Amsterdam District Court has today rendered its decision on the Administrators’ application for the appointment of a committee of representation and for measures regarding the list of claims as referred to in Article 259 of the Dutch Bankruptcy Act...
"On 25 May 2021 the Court decided to hear the unilateral requests made by parties other than the Administrators (i.e. Hamilton B.V. and Hamilton 2 B.V. and Lancaster 101 (Pty) Ltd. on Friday 4 June 2021. In short, the unilateral requests that will be pleaded at the hearing are a request for:
• interim measures related to the claim analysis (Hamilton);
• the termination of the SoP (Lancaster);
• certain information (Lancaster); and
• the appointment of experts (Lancaster).
"SIHNV will oppose the Hamilton and Lancaster requests and will defend any attempt to disrupt the proposed global settlement and SIHNV’s ongoing SoP."
Mr Price final results March 2021
Durban, KZN, SA (May 27, 2021) – Revenue from continuing operations for the 53 weeks ended 3 April 2021 went down 0.6% to R22.8 billion (2020: R23.0 billion) whilst profit from operating activities dropped 2.9% to R3.9 billion (2020: R4 billion). Profit attributable to shareholders decreased 2.1% to R2.6 billion (2020: R2.7 billion). In addition, headline earnings per share from continuing operation went up 1.4% to 1 070.3 cents per share (2020: 1 055.3 cents per share).
Final cash dividend declaration: Notice is hereby given that a final gross cash dividend of 462.70 cents per share was declared for the 53 weeks ended 3 April 2021. No final dividend was declared in the prior year.
Company outlook: The global economy is set for a recovery off the low base created by COVID-19. However, this is still only expected to reach pre-pandemic levels in 2023 across most nations. The group's biggest market, South Africa, experienced fiscal distress due to COVID-19 which impacted domestic demand. However, this was softened by temporary relief measures provided by government (TERS and COVID-19 relief grant) and private sector credit providers. These relief measures have largely come to an end and the true state of the consumer environment is most likely to be revealed in the short to medium term. The group has benefitted from consumers receiving short term financial assistance but believes that the primary reason for its outperformance since the level 5 lockdown is due to its superior merchandise assortment and strong value offering to customers.
The group has proven that its business model is resilient in the worst possible circumstances and that its people are highly skilled and adaptable.
The group has a legacy created by its founders which established a culture within the organisation of partnership even in the most uncertain conditions. This philosophy allowed the group to compensate all its associates at full pay during the pandemic and it is a privilege to reward associates for their extreme dedication with incentives for outperformance.
Post year end trade (4 April to 15 May 2021) has been strong. Group retail sales increased 27.5% (excluding Power Fashion, up 16.7%), compared to the corresponding period in 2019 which grew 3.4% (2020 non comparable due to COVID19).
The group continues to trust in its fashion value business model to perform despite the prevailing uncertainty. FY2022 promises to be equally uncertain with many factors that will need to be overcome. The new group vision and strategy provides a clear call to action, bringing additional focus to its highly talented associates who are committed to delivering value to all stakeholders.
Pepkor interim results March 2021
Cape Town, W. Cape, SA (May 27, 2021) – Revenue for the interim period increased by 8.1% to R36.4 billion (2020: R33.7 billion), gross profit rose 5.2% to R12.9 billion (2020: R12.2 billion), operating profit climbed by 20.7% to R4.6 billion (2020: R3.8 billion) and profit attributable to owners of the parent shot up 65.5% to R2.4 billion (2020: R1.5 billion). Furthermore, headline earnings per share from continuing operations rose to 68.8 cents per share (2020: 45.6 cents per share).
Dividend: Consistent with prior interim periods, no interim dividend is declared by the group. In response to the COVID-19 pandemic, the group suspended the dividend in the 2020 financial year with focus on liquidity preservation and allocation of resources. The dividend policy of three times earnings cover remains in effect.
Company outlook: The group's business model and market positioning have sustained performance since the onset of COVID-19 by responding effectively to changes in the operating environment and consumer behaviour, thereby entrenching its position in the discount and value sector. During this time Pepkor has made excellent progress in strengthening its balance sheet and liquidity, which will support its investment in growth opportunities.
Varying degrees of government-mandated lockdown protocols were put in place since April 2020 to mitigate the spread of COVID-19. It would therefore be more meaningful for trading subsequent to March 2021 to be considered against the group's 2019 trading performance. Based on this comparison, the group is pleased to report positive trading momentum in all retail brands subsequent to March 2021. This includes a good start to the winter-season trade in the CFH brands and continued demand for furniture, appliances and consumer electronics.
Pepkor's product mix and value positioning is ideally suited to the changing consumer behaviour, focusing on essential and everyday products. Pepkor's footprint will continue to expand, especially in the most robust brands such as PEP and Ackermans with 200 new stores planned during this financial year.
Animal Health
Diseases like foot-and-mouth (FMD) and avian influenza (AI) indirectly affect the leather industry because of the impact they have on the export of meat, thereby harming the viability of beef, game and ostrich farmers, and putting more pressure on hide and skin sales to contribute more.
Outbreak of FMD in KZN
Pretoria, Gauteng, SA (May 28, 2021) – The Department of Agriculture, Land Reform and Rural Development (DALRRD) has announced an outbreak of foot-and–mouth disease (FMD) outbreak in cattle in Mtubatuba under UMkhanyakude District Municipality in KwaZulu- Natal.
The department collected samples on 26 May during routine disease surveillance, after local veterinary officials noticed cattle showing suspicious lesions at one communal location. The location is in an area that was part of the FMD-free zone prior to the suspension of this internationally recognised status by the OIE in 2019.
The diagnosis was confirmed by the Onderstepoort Veterinary Research Laboratory on 27 May 2021. Viral typing is ongoing to determine the identity of virus involved in this outbreak. A team of officials from the KwaZulu-Natal Department of Agriculture and Rural Development and DALRRD are conducting further investigations to determine the extent of the outbreak. The control measures will be determined by the findings of this investigation.
An immediate temporary standstill of all cloven-hoofed animals, including livestock and game, has been imposed in the District Municipalities of King Cetshwayo and Umkhanyakude, as well as the Local Municipalities of Nongoma, Ulundi and Pongola in the Zululand District Municipality. No movement of live cloven hoofed animals is allowed into and out of or through these districts. The area under standstill will be reviewed within 2 weeks, based on further disease investigations.
Farmers in northern region of KZN, outside the temporary standstill area, are cautioned to observe bio-security measures – not to allow any new animals into their herds, and to minimise the movement of their own herds to other farms.
They Said It
"It all goes to covering the overhead - not that the overhead gets covered." - Woods Tanning member Andy Woods on the wide variety of leathers his tannery processes.
"Sorry. Don't know how. I was born in 1961." - Oasis Tanning's Grant Hoffman, responding to a request to send photos in higher resolution. Oh, do I know how he feels. Not about that, necessarily, but technology in general.
Nike beats Puma in latest round of trademark fight over 'Footware'
According to a report in The Fashion Law on May 27, "a court in the United Kingdom sided with Nike on Thursday in an ongoing trademark squabble with Puma that centers on the Beaverton-based sportswear titan’s quest to register the word “Footware” as a trademark for use in connection with computer hardware modules, electronic devices, and computer software. Following an unfavorable outcome before the United Kingdom Intellectual Property Office in September 2020, in which a Hearing Officer rejected Puma’s bid to block the registration of Nike’s “Footware” mark, Puma lodged an appeal with the High Court of Justice in London, arguing that Nike’s registration should be barred because it is a deceptive term, not an indicator of source of the proposed goods and services listed in its application."
The full report is here.
Comment: Nike and Puma think 'Footware' as a catchy word to describe 'tech-driven sneakers'. As someone who's spent way, way too many years correcting spelling, I think the distinction between 'Footwear' and 'Footware' will go over most of the target audience's heads.
Directory and Calendar updates
The S&V Directory and the S&V Calendar are dynamic documents, undergoing ongoing constant updating. Readers are therefore advised to refer to them at least once a week.
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
31/05/1951: James Stewart, Tokyo+Co, Cape Town, W. Cape, SA.
31/05/1954: Anthony Pearce, ?, formerly Gringo Leather, Port Shepstone (now Midland Leather).
31/05/1959: Mike Ing, The Ing Thing, Howick, KZN, SA.
31/05/1963: Craig Davis, Spunlok, Pinetown, KZN, SA.
31/05/1972: Calay Grecia, Classic Components, Pinetown, KZN, SA.
01/06/1942: Chris Horne, The Little Slipper Company, Port Elizabeth, E. Cape, SA.
01/06/1947: Peter Howard, left the industry, formerly CPC, Port Elizabeth, E. Cape, SA.
02/06/1947: Anver Carrim, Colam Trading cc t/a Yankees, Rustenburg, N.W. Province, SA.
02/06/1975: Shaun Ganesh, Nikkita Footwear, Durban, KZN, SA.
02/06/1983: Jana van Vuuren, Maraschino Shoes, Pretoria, Gauteng, SA.
03/06/1958: Tom Bailey, Watson Shoes, Great Brak River, W. Cape, SA.
04/06/1946: Hamish Whyte, Welbourne Shoes, Robertson, W. Cape, SA.
05/06/1929: Hannes Louw, retired, formerly KKI, Mossel Bay, W. Cape, SA.
05/06/1960: Tom Bassage, CC Leather, Pietermaritzburg, KZN, SA.
06/06/1943: Doug Patterson-Roberts, Marchez Shoe Salon, Shelley Beach, KZN, SA.
06/06/1951: Yusuf Mayet, Come Duze Store, Johannesburg, Gauteng, SA.
06/06/1963: José Leite, SA Polymers & Compounds, Gillitts, KZN, SA.
In Memoriam this week
01/06/1992: Harry Gassert, formerly Panther Shoe Co [closed], Cape Town, W. Cape, SA.
03/06/2016: Joop de Voest (b. 21/01/1954), Marketing & Planning Consulting Services, De Rust, W. Cape, SA.
04/06/2002: Rex Phillipson (b. 13/4/1917), Picaninni Shoes [closed], Durban, KZN, SA.
06/06/2001: Willem Elbers (b. 09/04/1941), East Cape Tanning [closed]/BASF, Uitenhage, E. Cape, SA.
06/06/2002: Willie Compion (b. 21/10/1929), G&D Shoes [closed], Bulawayo, Zimbabwe.
06/06/2013: Willem Lubbe (b.25/01/1925), AP Lubbe & Son [closed], Stellenbosch, W. Cape, SA.
09/06/2002: Howard ‘Snowy’ Vaubell, Crown Footwear, Pinetown.
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.
 
Exchange rates
1. SA Rand (ZAR)/Lesotho Loti (LSL)/Namibian Dollar (NAD)/Swazi Lilangeni (SZL)
Source: http://www.x-rates.com/calculator/
| |
Euro € |
GBP £ |
US $ |
CNY ¥ |
| 2021/04/10 |
R17.38 |
R20.01 |
R14.60 |
R2.22 |
| 2021/04/17 |
R17.15 |
R19.80 |
R14.31 |
R2.19 |
| 2021/04/24 |
R17.26 |
R19.81 |
R14.27 |
R2.19 |
| 2021/05/01 |
R17.43 |
R20.03 |
R14.49 |
R2.23 |
| 2021/05/08 |
R17.10 |
R19.67 |
R14.06 |
R2.18 |
| 2021/05/15 |
R17.16 |
R19.92 |
R14.13 |
R2.19 |
| 2021/05/22 |
R17.00 |
R19.75 |
R13.96 |
R2.16 |
| 2021/05/29 |
R16.79 |
R19.56 |
R13.77 |
R2.16 |
Note: For previous rates, see HERE
2. Botswana Pula (BWP)
Source: https://www.xe.com/currencyconverter/
| |
Euro € |
GBP £ |
US $ |
CNY ¥ |
| 2021/04/10 |
13.13 |
15.12 |
11.03 |
1.68 |
| 2021/04/17 |
12.98 |
14.98 |
10.83 |
1.66 |
| 2021/04/24 |
13.09 |
15.03 |
10.82 |
1.66 |
| 2021/05/01 |
12.98 |
14.92 |
10.80 |
1.66 |
| 2021/05/08 |
13.16 |
15.13 |
10.82 |
1.68 |
| 2021/05/15 |
13.04 |
15.14 |
10.74 |
1.66 |
| 2021/05/22 |
13.06 |
15.18 |
10.73 |
1.66 |
| 2021/05/29 |
12.97 |
15.10 |
10.63 |
1.67 |
3. Malawian Kwacha (MWK)
Source: https://www.xe.com/currencyconverter/
| |
Euro € |
GBP £ |
US $ |
CNY ¥ |
| 2021/04/10 |
935.73 |
1077.61 |
786.22 |
119.97 |
| 2021/04/17 |
945.86 |
1092.19 |
789.44 |
121.06 |
| 2021/04/24 |
957.69 |
1098.87 |
791.67 |
121.88 |
| 2021/05/01 |
953.33 |
1095.68 |
793.00 |
122.47 |
| 2021/05/08 |
962.89 |
1107.41 |
791.61 |
123.08 |
| 2021/05/15 |
969.29 |
1125.06 |
798.15 |
123.99 |
| 2021/05/22 |
968.84 |
1125.67 |
795.46 |
123.62 |
| 2021/05/29 |
963.70 |
1122.37 |
790.24 |
124.09 |
4. Zambian Kwacha (ZMW)
Source: https://www.xe.com/currencyconverter/
| |
Euro € |
GBP £ |
US $ |
CNY ¥ |
| 2021/04/10 |
26.47 |
30.48 |
22.24 |
3.39 |
| 2021/04/17 |
26.56 |
30.67 |
22.17 |
3.40 |
| 2021/04/24 |
27.01 |
30.99 |
22.33 |
3.43 |
| 2021/05/01 |
26.75 |
30.75 |
22.25 |
3.43 |
| 2021/05/08 |
27.29 |
31.39 |
22.44 |
3.48 |
| 2021/05/15 |
27.32 |
31.71 |
22.50 |
3.49 |
| 2021/05/22 |
27.44 |
31.88 |
22.53 |
3.50 |
| 2021/05/29 |
27.42 |
31.93 |
22.48 |
3.53 |
5. Zimbabwean Dollar (ZWL$)
Source: https://www.xe.com/currencyconverter/
| |
Euro € |
GBP £ |
US $ |
CNY ¥ |
Official US$ |
| 2021/04/10 |
430.72 |
496.02 |
361.90 |
55.22 |
84.39 |
| 2021/04/17 |
433.60 |
500.68 |
361.90 |
55.49 |
84.48 |
| 2021/04/24 |
437.80 |
502.33 |
361.90 |
55.71 |
84.48 |
| 2021/05/01 |
437.07 |
500.03 |
361.90 |
55.89 |
84.50 |
| 2021/05/08 |
440.20 |
506.27 |
361.90 |
56.26 |
84.52 |
| 2021/05/15 |
439.50 |
510.12 |
361.90 |
56.22 |
84.61 |
| 2021/05/22 |
440.78 |
512.13 |
361.90 |
56.24 |
84.64 |
| 2021/05/29 |
441.28 |
513.93 |
361.90 |
56.82 |
84.72 |
ABSA Agri Trends: Hides & skins prices
Johannesburg, Gauteng, SA (May 28, 2021) - The current average hide price decreased by 4.4% to R7.47/kg from R7.82/kg a week ago. The current price is 16.7% lower than the average price a month ago and is 941.5% higher than the average 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, Marlene Louw, senior agricultural economist, Absa group.
| Hide & skin price progression |
| Date |
Hides/Kg |
Dorper/Skin |
Merino Skin |
| 2020/11/06 |
2.36 |
26.00 |
44.00 |
| 2020/11/13 |
2.38 |
23.59 |
40.00 |
| 2020/11/20 |
2.69 |
35.00 |
50.00 |
| 2020/11/27 |
3.08 |
36.00 |
49.00 |
| 2020/12/04 |
3.65 |
34.03 |
49.00 |
| 2020/12/11 |
3.68 |
33.21 |
50.83 |
| 2020/12/18 |
3.93 |
32.59 |
51.67 |
| 2021/12/25 |
4.08 |
34.39 |
51.67 |
| 2021/01/01 |
3.93 |
34.03 |
54.00 |
| 2021/01/08 |
3.88 |
31.43 |
46.43 |
| 2021/01/15 |
4.03 |
31.43 |
46.43 |
| 2021/01/22 |
4.16 |
30.00 |
47.00 |
| 2021/01/29 |
4.04 |
33.05 |
50.83 |
| 2021/02/05 |
3.86 |
31.41 |
45.71 |
| 2021/02/12 |
4.33 |
35.46 |
45.83 |
| 2021/02/19 |
4.29 |
34.49 |
50.00 |
| 2021/02/26 |
4.94 |
34.70 |
47.50 |
| 2021/03/05 |
5.67 |
38.33 |
51.67 |
| 2021/03/12 |
4.80 |
42.50 |
59.17 |
| 2021/03/19 |
4.99 |
35.74 |
52.86 |
| 2021/03/26 |
6.33 |
35.16 |
55.00 |
| 2021/04/02 |
6.50 |
31.83 |
49.00 |
| 2021/04/16 |
8.98 |
37.44 |
50.00 |
| 2021/04/22 |
8.37 |
|
|
| 2021/04/29 |
8.98 |
40.96 |
62.00 |
| 2021/05/06 |
7.56 |
40.96 |
62.00 |
| 2021/05/24 |
7.82 |
40.83 |
61.67 |
| 2021/05/28 |
7.47 |
|
|
Note: For previous prices, see HERE
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:
Model Shoes, Worcester, W. Cape, SA. Family footwear.
Modern Trading Store, Laingsburg, W. Cape, SA. General dealer.
Classified Adverts
Wanted Urgently
Shoe back part moulding machine. Tel 083 235 2541
Contact us
News & Classifieds: Tony Dickson, +27 (0)31 209 7505, tony@svmag.co.za
Next newsletter: June 7, 2021.
SAFLIA enquiries: Tel 0800SAFLIA * Email info@saflia.co.za * Website http://www.saflia.co.za
Our website www.svmag.co.za
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