S&V Weekly Newsletter Vol.9 No.07, February 13 2023

Download PDF

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

Order positions

Winter is, well, winter, summer shows promise

We again asked a number of manufacturers and importers of footwear and leather goods to comment on their winter and summer order positions.

Tavonga Gonyora, Dick Whittington Shoes
Pietermaritzburg, KZN, SA - Sales are up 8% year-on-year thanks to our loyal retailers and our valuable brands. The current operating macroeconomic environment has seen retailers take a cautious stance though when placing forward orders.  As a business we remain committed to our DNA on delivering quality footwear on-time as we finalize our Summer 2023 range building to aid our trusted and loyal customers to achieve their sales targets.

Brandon Geyser, EVA Industries
Durban, KZN, SA - AW sales are never big for a flip flop producer. However, we have enough work during this period to produce at a moderate rate consistently. We also rely heavily on other industries and sectors during this time which are not as seasonal as flip flops.
      SS23 is filling up nicely and a lot of the retail brands have already given us their forecasts and provisionally booked production space with the factory – of course this could change closer to the time and is sales dependant, but so far, so good.

Rolland Eboru, Fred Footwear
Port Elizabeth, E. Cape, SA - It is assumed that the sector is still in the process of adjusting to its ‘new normal’, which has both positive and negative impact to different organizations. However, there are some preliminary indications that the trend is positive. Albeit the context, Fred Footwear remains cautiously optimistic about the year.
      Thus far, the Fred Footwear’s 2023 Summer is better, in comparison to the prior season.         The winter position is somewhat uncertain. However, it is become increasingly evident that ‘Thinking-out-of-the-box’ regarding generating sales, has become a critical success factor, operating in the ‘new normal’ context.
 
Mike Farrer, Hi-Tec Sports Distributors
Cape Town, W. Cape, SA - Trade for aw2023 is 15% up on last year and SS23 at this early stage, with a bit to do still, is flat-lined. In the coming months we expect to grow slightly on SS22.
      This is on the back of 25% average growth over the past 3 years.
      We have had a good uptake in new markets in Africa which will fuel some future growth.
      So we are extremely happy under difficult trading conditions of late.

Klaus Manock, Manock Naturals
Durban, KZN, SA - Winter 2023 orders are good since we joined the European Fashion Council and have fantastic new ideas, styling, new techniques etc.
      Luckily load shedding has not impacted much on my production compared to tanneries, etc., that have got to have permanent power for their drums etc.
      However, my retail stores are suffering as some shopping malls do not have sufficient electrical backup during the load shedding.

Exports

Angels export deal with Harley Davidson

Durban, KZN, SA - Angel Footwear has sold stitchdown footwear to Harley Davidson, director Ashley Ramlakan confirmed last week. He was on his way to Magic in Las Vegas to relaunch Angel's Howzit range.

International

Adidas: The cost of (not) doing business with Kanye

Adidas' dependency on its Yeezy brand, a collaboration with American rapper and fashion entrepreneur Kanye West, which began in 2013 and ended, acrimoniously, last October, has been laid bare by a 'financial guidance for 2023' which the company published last week. The company hasn't yet decided what to do with existing stock.

Herzogenaurach, Germany (09 February 2023) - Adidas today published its financial guidance for 2023. While the company continues to review future options for the utilization of its Yeezy inventory, this guidance already accounts for the significant adverse impact from not selling the existing stock. This would lower revenues by around €1.2 billion and operating profit by around €500 million this year. Against this background, Adidas expects currency-neutral sales to decline at a high-single-digit rate in 2023. The company’s underlying operating profit is projected to be around the break-even level.
        Should the company irrevocably decide not to repurpose any of the existing Yeezy product going forward, this would result in the write-off of the existing Yeezy inventory and would lower the company’s operating profit by an additional €500 million this year. In addition, Adidas expects one-off costs of up to €200 million in 2023. These costs are part of a strategic review the company is currently conducting aimed at reigniting profitable growth as of 2024.
        If all these effects were to materialize, the company would expect to report an operating loss of €700 million in 2023.
      “The numbers speak for themselves. We are currently not performing the way we should”, said Adidas CEO Bjørn Gulden. “2023 will be a year of transition to set the base to again be a growing and profitable company. We will put full focus on the consumer, our athletes, our retail partners and our Adidas employees. Together we will work on creating brand heat, improve our product engine, better serve our distribution and assure that Adidas is a great and fun place to work. Adidas has all the ingredients to be successful: A great brand, great people, fantastic partners and a global infrastructure second to none. We need to put the pieces back together again, but I am convinced that over time we will make Adidas shine again. But we need some time.”
         In 2022, based on preliminary unaudited numbers, Adidas revenues increased 1% in currency-neutral terms. In reported terms, sales were up 6% to €22,511 million during the 12-months period (2021: € 21,234 million). The company’s gross margin reached a level of 47.3% (2021: 50.7%) in 2022. Adidas generated an operating profit of €669 million last year (2021: €1,986 million), reflecting an operating margin of 3.0% (2021: 9.4%). Net income from continuing operations was €254 million in 2022 (2021: €1,492 million).
 

VF Corporation: Vans down again, North Face up

Extracts from VF Corporation's third quarter earnings. Vans was down 13% to US$926.7 million in sales and Dickies was down 16% to US$177 million. The North Face was up 7% to US$1.2 billion, Timberland was unchanged at US$595.5 million.

Denver, US (07 February 2023) - VF Corporation today announced financial results for its third quarter ended December 31, 2022 and a series of actions to accelerate the path to its target leverage ratio and sharpen its focus, including declaring a quarterly per share dividend of $0.30, reflecting a 41% decrease over the previous quarter’s dividend.
Q3'FY23 Financial Highlights
* Revenue down 3% (up 3% in constant dollars) to $3.5 billion
* Earnings per share (EPS) down 1% to $1.31; Adjusted EPS down 17% to $1.12
Benno Dorer, Interim President and CEO, said: “We are pleased to reaffirm the recently communicated full year 2023 EPS outlook with revenue growth at approximately 3%, after navigating an increasingly challenging fiscal Q3. Spending the last few weeks with VF's dedicated and talented teams around the world has reinforced my belief in the tremendous opportunity ahead for our company. We are committed to improving execution through a sharpened focus on the biggest consumer opportunities and enhanced operational performance. Consistent with this objective, we are shifting resource priorities across the Company, including by reducing the dividend, exploring the sale of non-core assets, cutting costs and eliminating non-strategic spend, while enhancing the focus on the consumer through targeted investments. We are confident these actions will enable a return to profitable and sustainable growth and, with that, strong shareholder value creation.”
Q3’FY23 Operating Highlights
* EMEA region down 2% and up 10% in constant dollars, the seventh consecutive quarter of double-digit growth in constant dollars
* Asia Pacific region down 7% and up 4% in constant dollars, reflecting a sequential improvement across the region and in Greater China, where sales were down 11% and down 1% in constant dollars, and continued strong growth in the rest of Asia
* Standout performance in the outdoor brands, led by The North Face up 7% and up 13% in constant dollars, with Timberland flat and up 6% in constant dollars
* Vans down 13% and down 9% in constant dollars, reflecting positive performances in Europe and Asia outside of Greater China, while the Americas remained negative
* Balanced performance across both Direct to Consumer and Wholesale channels
* Supply chain challenges remained persistent in the quarter and are being addressed, with actions in place to return to full customer service at a normalized cost
FY23 Outlook*
* Total VF revenue up approximately 3% in constant dollars, within the previous outlook range
o Vans revenue is expected to decline by high single digits % in constant dollars, compared to the previous outlook of down mid-single digits %
o The North Face is expected to be up by at least 14% in constant dollars, compared to the previous outlook of up at least 12%

In case you missed it!

The February issue of S&V African Leather Magazine

CLICK HERE TO VIEW IT ONLINE

S&V African Leather Magazine Vol17 No2 February 2023
IN THIS ISSUE:

03 Upfront
- A new quip from Sam Setter in each issue.
- Sector forecasts for 2023:
-     Market outlook for crocodilian leather: Output of lower grade skins appears to be dropping, says Le Croc's Stefan van As.

06 Fairs & Conferences
- SLTC UK's 125th conference: African tanners invited to participate online.

08 An Eclectic View
- Soil science 101: Developing compostable leather means tanners should know something about soil, writes H. Procter.

10 Decoding Tanning Science
- How to prevent the formation of low tear strength leathers - part 1 of a review of technical papers by Dr Clive Jackson-Moss of the ISTT.

12 Weights & Measures
- Compiled by the ISTT.

13 Sustainable Leather Foundation
- Real change takes time, writes MD Deborah Taylor.

14 Agriculture
- A further rate hike dampens agri-outlook in the already volatile operating conditions, writes FNB's Paul Makube.

14 Notice Board
- Bader SA: Appointment of CFO Casper van der Walt.
- Beefmaster: André Bergh appointed GM of feedlots and farms.
- Zambeef: CEO Faith Mukutu 'a woman to watch'.



Advertisers in this Issue
Authenticae (02), Els Agencies (03), Evolution Engineering (01), Italtan (04), Mimosa (07), Rolfes Leather Division (05), S&V Calendar (13), S&V Directory (11), Southern African Footwear & Leather Export Council (SAFLEC) (09), Stahl (OFC), Sustainable Leather Foundation (06).

Emigrating

East London, E. Cape, SA - Wayne Stanford, agent for Bolton Footwear's Grasshopper brand in the E. Cape, and prior to that brand manager for Bronx. Is emigrating to New Zealand. Another one. I find that so sad.

They Said It

With it being Valentine's Day tomorrow (tsk, tsk, you haven't forgotten, have you?), the 16-year-old who shares our lives was interrogating me about what I intend to do about it. Wholly dissatisfied with my response, it was clear she had given it a LOT of thought, and an exhaustive - and exhausting - list followed. Her final instruction: Into the obligatory bunch of red ("must be red") roses, slip a plastic one, then write: "I will love you until these ALL wilt."

New subscribers last week

Jesmile Rushambwe, Leather Technician, J.RUSH ENTERPRISES, East Rand, SA.

Got anything you'd like to share?

Do you have any suggestions, comments or experiences about the industry that you'd like to share with the industry? - tony@svmag.co.za

13/02/1950: Rowan Allison, Midland Leather, Pinetown, ZN, SA.
13/02/1950: Dhiraj Dajee, Avalon Job Buyers, Cape Town, W. Cape, SA.
13/02/1964: Jean-Marc Tostee, agent, Durban, KZN, SA.
13/02/1975: Naeem Sonpra, Sonpra Bros, Polokwane/Pietersburg, Limpopo, SA.
13/02/1977: Steven Eckstein, emigrated, formerly Sports Action, Durban, KZN, SA.
14/02/1951: Maryse de Ranero, Great Brak River, W. Cape, SA.
14/02/1975: Alita Scholtz, All Protection Safety, Vanderbijlpark, Gauteng, SA.
14/02/19??: Janine du Preez, freelance consultant, Cape Town, W. Cape, SA.
15/02/1948: Rajin Sheodin, Ace Components, Pinetown, KZN, SA.
15/02/1957: Ashraf (Baboo) Kader, Kaytex Belts, Pretoria, Gauteng, SA.
15/02/1965: Sanjay Nana, Navada Clothing, Johannesburg, Gauteng, SA.
16/02/1955: Hennie Roets, BKB, Port Elizabeth, E. Cape, SA.
16/02/1966: Lorraine Jackson, agent, Johannesburg, Gauteng, SA.
16/02/1987: Mohamed Hoosen, Winners, Klerksdorp, N.W. Province, SA.
17/02/1950: Ian McDonald, retired, formerly Speciality Threads [closed], Amanzimtoti, KZN, SA.
17/02/1960: Raju Dhaya, VJ’s Superstore, Humansdorp, E. Cape, SA.
17/02/1966: Anton Sprake, agent, Windhoek, Namibia.
17/02/1971: John Harman, formerly Bata SA, Pinetown, KZN, SA.
17/02/1977: Lara Campher, Chillisource, Durban, KZN, SA.
18/02/1942: George Naicker, formerly Edcon, Johannesburg, Gauteng, SA.
18/02/1944: Colin Marx, retired, formerly Tropelli [closed], Pinetown, KZN, SA.
18/02/1956: Kevin Thompson, Leatherite International, Pretoria, Gauteng, SA.
18/02/1957: Desmond Sutherland, Aviocean (Natal), Durban, KZN, SA.
18/02/1977: Zahir Kader, Kaytex Belts, Pretoria, Gauteng, SA.
19/02/1944: Bruno Tarasconi, formerly Bruno Original, now Etsang Dieta Primary Co-operative, Johannesburg, Gauteng, SA.
19/02/1988: Joash Govender, Prisaan Footwear, Pinetown, KZN, SA.

14/02/2004: Brian Matkovich (b. 06/02/1941), Futura Footwear, Pinetown, KZN, SA.
17/02/2011: Basil Benjamin (b.27/08/1929), agent, Johannesburg, Gauteng, SA.
18/02/2017: Harry Adams, (b. 24/02/xx), Finlam Textiles, Pinetown, KZN, SA.
19/02/2015: Professor Dr Des Cooper (b. 14/04/1928), Leather Industries’ Research Institute (LIRI) [closed], Grahamstown, E. Cape, 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.

3. Malawian Kwacha (MWK)

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

4. Zambian Kwacha (ZMW)

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

5. Zimbabwean Dollar (ZWL$)

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

Note: For previous rates, see HERE

ABSA Agri Trends: Hides & skins prices

Johannesburg, Gauteng, SA (09 February 2023) - The current average hide price remained unchanged at R4.18/kg from a week ago. The current price is 0.4% lower than the average price a month ago and 25.4% lower than the average price a year ago. The range of prices reported was as follows: Minimum price: R3.74 Maximum price: R5.00. Please note: Our methodology weighs the prices we collect according to the number of hides they sell in a month. This is done to make it more representative of the prevailing market price. NB* Hide prices are determined by the average of the RMAA (Red Meat Abattoir Association) and independent companies. - Marlene Louw, senior agricultural economist, and Nkhensani Mashimbyi, agricultural economist, Absa group.

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:
JFK Trading, Durban, KZN, SA. Footwear importer and wholesaler.
J.M. de Barros Viana Orthotics & Prosthetics, Cape Town, W. Cape, SA.

Contact us

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

Next newsletter: February 20, 2023.

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

Our website www.svmag.co.za