S&V Weekly Newsletter Vol.7 No.24, June 14 2021

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After months of rumours, it's official: IDC pulls plug on FLIC

In an statement over the weekend by Footwear & Leather Industries Cluster (FLIC) Executive Manager, Ernest Heunis, he said the FLIC Board "had no choice" but to shut it down after the Industrial Development Corporation (IDC) last month decided not to continue funding. The statement read:
Following a decision made by PAP (Project Approval Panel) on the 13th May 2021 not to approve the extension of further funding for the National Cluster, the FLIC Board was left with no choice but to suspend FLIC’S operations due to a lack of availability of CIP funding (or alternative funding), to support current operational expenditure.  FLIC initially temporarily suspended operations at the end of March 2021, however following the notification from the IDC, the “Not for Profit” company will have to be permanently closed down and wound up unless alternative funding can be sourced elsewhere.
      Some great strides and achievements had been made by FLIC over the past 6 - 9 months in spite of Covid-19, that were closely aligned to the 2030 Masterplan. For instance, The Training Academy - envisaged and planned by FLIC to be launched in the near future - will have to be scrapped for now, unless alternative funding can be sourced elsewhere. It is estimated that the Footwear Industry will need to create an additional 11- 12 000 jobs in order to produce the +/-  60 million additional pairs set out in the Masterplan by 2025/6.
      Without embarking on a national industry-supported formal skills development programme, as envisaged by FLIC with the establishment of the Training Academy, training and skills development will have to be done in-house. This will place a large burden on industry to train staff and do skills development in-house. The smaller industry players will find it particularly difficult to grow their workforce and skills base in line with Masterplan expectations and to recruit specialised skills needed for improving market access, product design and automation using CAD, as well as operator and supervisor skills training. These resources will be crucial in order for industry to achieve the targets outlined in the 2030 Masterplan and to improve SMME development in this sector.
      New guidelines for the funding of clusters have been drafted and will hopefully be published soon. It is however understood that the concept of a National Cluster assuming interventions on behalf of the broader industry (big and small), has been discarded in favour of retailer-driven, vertical cluster formations. The objective of the Retail Master Plan is to achieve job retention in the clothing, textile, footwear and leather manufacturing industries through import replacement. The bulk of imports in the shoe industry is merchandise that mainly use non-leather, fossil fuel-derived raw materials.
      It should however be recognised that the international long term trend is to replace fast fashion merchandise with products manufactured from renewable and eco-friendly materials (such as leather).  The development of the local leather industry value chain requires artisanal and technical skills in leather tanning and leather craft, and unless this is addressed through specific interventions, will remain a constraint in the development and growth of sustainable local enterprises that specialises in the manufacturing of durable leather goods.
      The FLIC Team would like to extend their appreciation and thanks to all Stakeholders (industry bodies, retailers, manufacturers and SMMEs) for their inputs and support of FLIC over the past two years.

Industrial Footwear

Cattell's: Erratic, but volumes still there

Springs, Gauteng, SA – Sales of safety footwear have been good overall, although somewhat unpredictable, said Rob Cattell, managing member of Cattell's Industrial Footwear, which mostly supplies resellers.       "I don't have a problem with trading conditions," he said. "They're a little unstable - you can have 5 good days and then a bad day or 2 - but I have a large customer base, so if some of the regulars don't buy for a while, others who haven't bought for a long time suddenly reappear. If it wasn't as big as it is, I might have felt more of a slowdown."
      He said getting stock "is probably more of a problem", both of locally made and imported footwear.
      In some cases, imports have been affected by shipping delays, "and locally, I think there's probably been a bottleneck with some of the CMT guys making uppers".

Sportswear

Somerset Sports: Learning to live with the lesser brands

Somerset West, W. Cape, SA – Trade "is very tough", Somerset Sports member Dirk Wessels said. "The biggest impact is of course the ban on school and amateur team sports, but really Covid has just been an additional impact on an economy which has been in decline for 9 or 10 years."
      A major effect of the pandemic has been on stock. "Currently supply is very inconsistent and unpredictable," he said. "When Covid started, suppliers became very cautious because they knew retailers were sitting with stock and couldn't trade. They cancelled orders or shrunk or split orders. Then, when stock started to deplete at retail, wholesalers didn't have enough. It doesn't help that we're a small market, and that bigger countries are taking most of what's available, and we must accept what we get."
      Now that retail was "trying to be normal", he said some smaller wholesalers had liquidity problems and were pushing for shorter payment terms. "Some of the bigger wholesalers can afford to offer normal terms," he said, "but some of the smaller ones can't afford more than 15 days."
      He said in sports equipment, like fishing, his business hadn't so much changed brands but supplemented what its normal suppliers didn't have in stock by "filling the gaps" from smaller brands.
      "Footwear is different," he said. "When Nike told us they were closing our account because of their International business model, I closed my account straight away. When Adidas took the same route, I did the same. I don't have an account with Puma anymore either.
      "So I went to Asics - they're here in Cape Town and easy to deal with. I asked if I could bank on them, and they said absolutely. The same with New Balance. We also started stocking smaller brands, like Mizuno and Saucony - all technically good product."
      How did his customers react? "In sport, product knowledge is the important thing. When I stopped stocking Nike, I didn't spend a lot advertising the new brands. People would phone to ask whether I had Nike. I'd tell them 'no, but I have other very good alternatives. Come in and see.' Now I've got regular customers wearing the other brands. But you can only do that if you know what you're talking about."
      He said he'd suggested to his new suppliers that this was an opportunity to build their brands through the independents. "One of them said 'they [the independents] didn't look after us before this happened, and I'm not going to bend over backwards for them now'.
      The key to surviving was to be hands on, he said. "Under normal circumstances either my partner or both of us will be in the store. That way you see what's selling, which allows you to make sure you have the right stuff at the right time. You can't sit in the pub and hope the business runs itself."

Men's outfitters

Thiel's: Covid carelessness a danger

Windhoek, Namibia – Perhaps against the general run of apparel retailing in Namibia, men's outfitter and family footwear retailer Thiel's Shoes saw business improve between October last year and May this year to levels above the same period in 2019-2020, and then plateau, proprietor Peter Meinzer said, but he believes another Covid-inspired downturn will follow, and that it will take "at least 3 years" before the economy recovers.
      "Business had been declining for years before Covid," he said. "That just made a bad situation worse."
      What concerns him is that consumers have stopped taking the pandemic seriously.
      "There's been an upswing in confidence among the public that the pandemic is behind us," he said. "However, there's been an increase in cases and in deaths, and I think the third wave is on its way, with all that signifies for retail."
      A major part of that impact is tourism. "Indirectly everyone in Namibia is dependent on tourism," he said. "I don't sell to tourists, but I sell to the hotel employee who has a job because of tourism."
      He said Thiel's had strictly implemented Covid prevention regulations - not followed by all other retailers - "and I think consumers have appreciated the discipline".
      Thiel's concentrates on formal wear, but has diversified since the pandemic began, including, for the first time, slippers.
      He said finding stock was a problem.

Stock Exchange News Services (SENS)

TFG final results March 2021

Extracts from this report. For the full report, click here.
Cape Town, W. Cape, SA – Revenue lowered to R35.6 billion (R38.5 million) whilst operating profit before acquisition costs, gain on bargain purchase and impairment of goodwill and brands tumbled to R1.5 billion (R4.7 billion). Loss attributable to equity holders came to R1.9 billion (profit of R2.4 billion). Furthermore, headline earnings per share decreased to 197.9 cents per share (1 029.3 cents per share).

Company outlook: Macroeconomic conditions in all territories in which we operate are likely to remain constrained, and changing customer needs will continue to disrupt traditional business models and accelerate digitalisation.
      The impact of lockdown measures has further caused a structural shift in the way we conduct business and how our customers interact with us. This will determine how we operate and engage with our customers in future, where we invest and what, strategically, we prioritise.
      However, the past year has also demonstrated that TFG remains resilient under extremely difficult and unprecedented circumstances.
      We remain committed to the prioritisation of our strategic investments in digital transformation and localised quick response manufacturing. We are satisfied with the manner in which we have de-geared our statement of financial position, both as a result of the successful rights offer as well as from strong trading conditions since the reopening of the various economies in which we trade. We will continue with our strong focus on expense control and capital management.
      We are well positioned to benefit from the expected recovery in the UK, which will be aided, to a large extent, by the extensive vaccine roll-out programme.

They Said It

"Huntex has been postponed till October. Poor Adriaan. What a damned business this Covid is. Or NOT business." - Gale Rice of Courteney Boot, Bulawayo, Zimbabwe, on the hunting trade show which was due to start last Thursday, and which is now scheduled to start on October 1 (see the calendar). If you're planning to attend, best keep an eye on updates.

"Load shedding last night means I am begging for an order submission extension from Adidas today." - Jax Snyman, owner of The Sweatshop, Johannesburg, Gauteng, SA.

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

14/06/1952: Terry Holton, ACA Threads, Gauteng, SA.
14/06/1969: Alison Piccione, KMP Footwear, Pinetown, KZN, SA.
14/06/1963: Niekie Vermaak, KKI Leather Marketing, Oudtshoorn, W. Cape, SA.
14/06/1965: Beverley Riley, Brits Leather Products, Brits, NW Province, SA.
14/06/1965: Allan Kisten, Spunlok, Pinetown, KZN, SA.
15/06/1945: James Cragg, agent, East London, E. Cape, SA.
16/06/1945: Yusuf Kadwa, May’s Shoes, Durban, KZN, SA.
16/06/1963: Deepak Dayal, Deluxe Footwear, Durban, KZN, SA.
16/06/1965: Tersia Wessels, retired, formerly Crocs SA, Somerset West, W. Cape, SA.
16/06/1973: Sue Meehan, left the industry, formerly Mantella Q Leather, Durban.
16/06/1985: Chris Stottelaar, Leather Systems, Port Elizabeth, E. Cape, SA.
16/06/1960: Jaywant Irkhede, the DTIC, Pretoria, Gauteng, SA.
17/06/1972: Odelle Hadnum, Chillisource, Durban, KZN, SA.
17/06/1973: Alfredo de Oliveira, Fashion Fever, Welkom, Free State, SA.
18/06/1933: Erich Debus, retired, formerly Richleigh Shoes [closed], Pietermaritzburg, KZN, SA.
18/06/1970: Karin Pieck, Shoes & Views.
19/06/1979: Sumen Naicker, Fusion Footwear, Springs, Gauteng, SA.
19/06/1969: Monica Frank, Labora Shoes, Durban, KZN, SA.
20/06/????: Patricia Khumalo, the DTI, Pretoria, Gauteng, SA.

In Memoriam this week

12/06/2004: Neville Williams (b. 04/1945), Cameo Components/Central Components [closed], Pinetown, KZN, SA.
17/06/1994: Roy Inggs (b. 18/06/1932), Inggs Shoe Stores [closed], Roodepoort/Florida, Gauteng, SA.

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.

ABSA Agri Trends: Hides & skins prices

Johannesburg, Gauteng, SA (June 03, 2021) - The current average hide price increased by 2.4% to R7.65/kg from R7.47/kg a week ago. The current price is 1.3% higher than the average price a month ago and is 969.9% higher than the average price a year ago. Market stakeholders are noting that supplies are tightening. 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.

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 21, 2021.

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