S&V Weekly Newsletter Vol.10 No.05, January 29 2024

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Back-to-school wrap

Good for the specialists, and hopefully a good start to the year

Jannie Vermeulen, Ekspa/Adno’s
Benoni/Brakpan, Gauteng, SA – This week was still busy – mostly late registrations at schools and then athletic wear and running spikes were high on the demand lists. Generally, an excellent back-to-school for Ekspa.

Chris van den Berg, Burgers Brothers
Johannesburg, Gauteng, SA – It’s been much better than last year – 20% up. Why? I’d say people are finally over the covid scare.

Idris Pandor, Gem Schoolwear
Durban, KZN, SA – Overall report on B2S trade was good from many of our clients. Luckily for our customers who may call us a "Storage Bank of School Wear" as we carry huge stocks for fill-in on basic items and they could replenish their stock within days.
      Another advantage is our manufacturing arm which is always readily available for our LOYAL clients who call on us to "Make a Plan" with a quick delivery on specialised school wear which at times could be days to a week or 2 to a maximum of 4 weeks. Our standard delivery time is approximately 4 to 6 weeks.
      This can only happen because we carry a huge range of colours and an inventory to back us up. Just in Time does not work for us.

Death Notice

Durban, KZN, SA - Sandy Campbell, former component manufacturer, died on 23 January, after a long illness, aged 75. He was a very keen surfer, and there will be a paddle out in his memory in front of Marine Surf Lifesaving Club on Thursday 1 February at 14.00.
There will be an obituary in the February issue of S&V Footwear & Leather Goods.

In case you missed it!

The January issue of S&V Footwear & Leather Goods Magazine

CLICK HERE TO VIEW IT ONLINE

S&V Footwear & Leather Goods Magazine Vol90 No1 January 2024

IN THIS ISSUE:

03 Profile
- Groundcover: The rise of the second generation, by Daniel McCarthy.

05 Headlines with Tinashe Mandirahwe
- Footwear entering USA declines sharply.
- Adidas achieves equilibrium with a 50/50 balance between in-store and e-commerce sales.
- UGG accused by PETA of misleading marketing.
- India and South Africa’s footwear markets today – a tale of contrasting fortunes.

12 Sustainability
- From the BBC: How to choose the right sneakers, shoes and boots – and make them last. .

17 Business
- How can African businesses ensure they benefit from evolving online payments?

19 Counterfeit Protection
- Origify from Bosch gives sneakers and other products a digital fingerprint as protection against counterfeits.

20 Notice Board
- Retired: Trevor Espey – ‘The Top Agent’ goes surfing fulltime.
- Obituary: Allan ‘Shaky’ Norman, NR Footwear – Cobbles is his legacy.
- Obituary: Cecil Fenwick, Saddler Belts – He cared.
- Obituary: Lou Jonck, Royal Adhesives – A team player.
- Obituary: Roley Rogers, agent – The hardest working man you could hope to meet.

23 Trade Statistics
- South Africa: November imports and exports of footwear and accessories, provided by SARS.



Advertisers in this Issue
APLF Fashion Access (02), APLF Materials + (04), Arena Trims (07), Freestyle Genuine Handcrafted Leather (OFC), Haesloop Agencies (09), Kaytex Belts (11), Leather Finishing Products (14), Partisan & Co/Palladium/Ben Sherman (01), Saddler Belts (05), SAFLEC (08), S&V Calendar (15), S&V Directory (23), Seadoone Shoes/Solite (18), Shotland Packing (16).

They Said It

"You think an old person can learn how to use a new phone?" - Garth Ribbink. A. Greenaways (Natal), Durban, KZN, SA. Spoken with some feeling.

"For older people, Fridays come too soon." - Garth again. It wasn’t his week last week. Not sure I agree entirely with the sentiment, though, although time is passing far too quickly. The first month of 2024 has GONE. Just like that.

"All wish lists are resource dependent." - Tavonga Gonyora, speaking in his role as chairman of the SA Footwear & Leather Export Council. His other hat is as sales director of Dick Whittington Shoes.

Stock Exchange News Service (SENS)

Note: The following articles are EXTRACTS from SENS reports, usually focusing on apparel-related issues only.

Woolworths – trading update and trading statement

‘Greater-than-expected pullback in discretionary spend’

Cape Town, W. Cape, SA (Tue 23 Jan 2024, 7:45) – The Group's turnover and concession sales from continuing operations (i.e. excluding David Jones, which was disposed of in the prior year) for the 26 weeks ended 24 December 2023, increased by 5.4%, and by 4.4% in constant currency terms. This should be considered in the context of the high prior period base, in which sales from continuing operations grew by 12.5%, driven in part by the post-Covid pent-up demand in Australia. During the last six weeks of the period, which included trade during the key festive season, sales growth accelerated to 7.2%, supported by our robust trade plans.

Trading statement

Given the inclusion of the David Jones contribution in the prior period, our group results to be reported for the first half of the 2024 financial year are not directly comparable to that of the prior period.
      As mentioned in our 20-week update released on the JSE Limited's Stock Exchange News Service ('SENS') on 15 November 2023, performance for the current period has been impacted by an increasingly challenging macro-economic backdrop, given the sustained effect of interest rate increases and higher living costs. This has negatively impacted footfall, resulting in a greater-than-expected pullback in discretionary spend in both geographies. In South Africa, our business operations were further disrupted by higher levels of loadshedding, congestion at the ports, and the impact of Avian flu on the availability of key food product lines.
      Group turnover and concession sales (including the six-month contribution of David Jones in the prior period,which is therefore non-comparable) decreased by 23.6% on the prior period on a total basis.

Woolworths
The economic environment in South Africa remains challenging, exacerbated by the country's energy and logistics crises, which continue to impact both business and consumer confidence. Whilst we have limited control over the macro environment, our unwavering commitment to quality, the ongoing investment in our value proposition and intensified focus on our customer, has further strengthened the trust that is placed in our brand.
Whilst our Fashion Beauty and Home business continues to make steady progress against its strategic priorities, sales for the 26-week period were impacted by poor availability, due in part to the late arrival of certain summer ranges arising from congestion at the ports. Turnover and concession sales grew by 2.2%, with comparable store sales increasing by 1.5%. Sales growth in the last six weeks of the period improved to 3.8%, supported by the successful execution of our Black Friday promotions and festive season trade. Our teams remain focused on full-price sales, which positively impacted price movement of 11.4%. Net trading space increased by 0.3% relative to the prior period, while online sales grew by 26.9% and contributed 5.4% of South African sales.

Country Road Group
Trading conditions in Australia and New Zealand have deteriorated further, with consumer sentiment in Australia at near-record lows, and household savings the weakest since the GFC. In addition, the retail industry has been disproportionately impacted by the shift in spending away from goods, to services. CRG sales for the current period declined by 5.0% and by 9.5% in comparable stores, off a high prior period base in which sales grew by 25.5% following the strong recovery from the Covid-impacted lockdowns. Sales growth in the last six weeks of the period was positive, at 1.3%.
      The Country Road brand continues to deliver a market-leading performance across key categories. Trading space increased by 6.6% during the period, supported by the ongoing expansion of our wholesale and concession channels. The contribution from online sales increased marginally to 26.8% of total sales.

AVI – notice to shareholders

Shareholding change

Johannesburg, Gauteng, SA – In accordance with section 122(3)(b) of the Companies Act and paragraph 3.83(b) of the Listings Requirements of the JSE Limited, shareholders of AVI are hereby advised that clients of Aikya Investment Management Limited, in aggregate, acquired an interest in the ordinary shares of the Company, such that the total interest in ordinary shares of the Company held by Aikya Investment Management's clients now amounts to 5.82% of the total issued ordinary shares of the Company.

Aikya Investment Management is a UK-based company. According to its website, it specialises in “Investing with high-quality stewards of businesses in emerging markets”.

TFG - trading update

Growth for TFG Africa, declines for UK and Australia

Cape Town, W. Cape, SA (Wednesday 24 January 2024, 8:47) – This trading update relates to the 9-month year-to-date period from 01 April 2023 to 30 December 2023 and the 13-week period from 01 October 2023 to 30 December 2023 (Q3 FY2024) against the comparative 9-month year-to-date period from 01 April 2022 to 31 December 2022 and the 13-week period from 02 October 2022 to 31 December 2022 (Q3 FY2023).

*Group turnover for Q3 FY2024 grew 4.5% on Q3 FY2023, and 9.0% for the 9 months ended 30 December 2023;
*TFG Africa turnover grew 5.1% in Q3 FY2024, with like-for-like turnover growth of 0.7%; Turnover for the month of December grew 11.8% (like-for-like 6.1%), with the highest full-price contribution for the year to date;
*TFG Africa’s cash turnover grew 6.6% in Q3 FY2024. Cash turnover for the quarter now comprises 75.8% of TFG Africa turnover and 82.4% of Group turnover;
*TFG London turnover declined 3.0% (GBP) in Q3 FY2024 off a strong post-COVID-19 recovery base in Q3 FY2023;
*TFG Australia turnover declined 7.3% (AUD) in Q3 FY2024, also off a strong post-COVID-19 recovery base; and
*Group online turnover grew 29.2% in Q3 FY2024, contributing 9.1% (Q3 FY2023: 7.4%) to total Group turnover for the quarter. TFG Africa online turnover grew 44.8% in Q3 FY2024, contributing 4.2% of total TFG Africa turnover (Q3 FY2023: 3.0%)

Operating context
Economic conditions in all operating territories remain challenging.
      In South Africa, this was exacerbated by continued load shedding and delays experienced at ports, which impeded the planned flow of inventory. The impact of these import delays was offset to an extent by the ability to increase volumes from TFG's local manufacturing capacity.
      As previously communicated, TFG London and TFG Australia's performances are set against last year's exceptionally strong post COVID-19 recovery. Consumers remain under pressure, with higher inflation and interest rates adversely impacting sales.

TFG Africa performance update
Turnover in Q3 FY2024 grew 5,1% on Q3 FY2023 (including Clothing turnover growth of 6,4%), with like-for-like turnover growth of 0,7%. Turnover for the month of December grew 11,8% (like-for-like 6,1%), with the highest full-price contribution for the year to date.
      Turnover was impacted by a generally softer Black Friday period in South Africa, with Stage 6 load shedding implemented over that weekend. Despite the challenging macro context, festive season trade delivered pleasing results, with core merchandise categories achieving strong growth for the month of December 2023.

Category turnover growth for TFG Africa was as follows:

*Non comparable growth resulting from the acquisition of Tapestry Home Brands in the prior year.

Cash turnover grew by 6,6% in Q3 FY2024 vs. Q3 FY2023, contributing 75,8% to total TFG Africa turnover. For the nine months ended 30 December 2023, cash turnover grew 15,3% compared to the same period in FY2023 (74,6% of total TFG Africa sales).
      Credit turnover grew 0,7% in Q3 FY2024, when compared to Q3 FY2023, and by 2,3% for the nine months ended 30 December 2023. Average acceptance rates for new accounts remained conservative at 17,8% for the nine months ended 30 December 2023 (FY2023: 20,4%), which is appropriate in the context of the constrained economic environment.
      Online turnover grew 44,8% in Q3 FY2024, now contributing 4,2% of total TFG Africa turnover (Q3 FY2023: 3,0%) and 40,2% (contributing 3,8%) in the nine months ended 30 December 2023, when compared to the nine-month period last year. Turnover growth has been driven by the consolidation of our TFG Africa retail brands on the Bash platform which was ranked as the number one South African fashion shopping app.
      TFG Africa opened 42 new stores during Q3 FY2024 (210 during the 9 months ended 30 December 2023), bringing the total number of stores to 3,663 stores as at 30 December 2023.
      TFG Africa's gross margin continues to recover from the impact of promotional activity in the first half of FY2024 required to clear excess inventory due to the impact of load shedding. Inventory levels decreased 11,6% compared to December 2022 and 13,7% compared to the FY2023 year end.

TFG London performance update
TFG London's performance for Q3 FY2024 showed some improvement in a tough consumer market and against a high base, with turnover declining 3,0% (GBP) for the Q3 FY2024 quarter, and 7,9% for the nine months ended 30 December 2023.
      Online turnover grew 8,4% in Q3 FY2024 and its contribution improved to 44,5% (Q3 FY2023: 39,9%).

TFG Australia performance update
TFG Australia's turnover declined 7,3% (AUD) for the Q3 FY2024 quarter against the post COVID-19 recovery base, and with consumer confidence remaining low. For the nine months ended 30 December 2023, turnover declined 7,2%.
      Online turnover declined 1,4% for the Q3 FY2024 quarter, contributing 6,2% to total TFG Australia turnover (Q3 FY2022: 5,8%).

Outlook
Trading conditions and consumer confidence are likely to remain under pressure, exacerbated by higher interest rates and inflation, as well as continued load shedding and port delays in South Africa.
      Turnover in Q4 FY2024 is expected to grow ahead of Q4 FY2023 given the impact of the significant load shedding experienced in this period last year.
      TFG continues to demonstrate operational and financial resilience from a diversified platform of market leading consumer brands and is well positioned to navigate the ongoing challenging economic conditions in all territories.

Mr Price - trading update

’Group sales growth at higher gross margin’

Durban, KZN, SA (Thursday 25 January 2024, 7:34) – During the third quarter from 01 October 2023 to 30 December 2023 of the financial year ending 30 March 2024, the group recorded growth in retail sales of 9.9% to R13.2bn. Comparable store sales were up 4.1%. The total comparable market's retail sales per the Retailers' Liaison Committee (RLC) grew 3.4%, resulting in the group gaining 130bps market share over the Period.
The store footprint increased by 85 new stores and the group's total footprint expanded to 2 892 stores. Trading space increased 7.1% on a weighted average basis and 6.2% on a closing basis. Cash sales, which constitute 90.4% of total retail sales, increased 10.5%. Credit sales increased 4.6% as the group's strict credit granting criteria continued.
      CEO Mark Blair said, "We anticipated a shift in momentum once we had successfully navigated the disruption of our ERP System change and the installation of loadshedding back-up power facilities in all our stores. Our trading performance improved monthly, and was strong during the critical month of December, with retail sales up 15.5% and a market share gain of 180bps. Our group's growth was led by our flagship division Mr Price Apparel, and further supported by strong sales growth from our acquisitions, which were fully in the base. Most pleasing from this result is that group sales were also achieved at a higher gross margin % than last year."

Performance summary
As experienced by the broader retail market, the quarter started slowly in October and improved into November. The total comparable market's retail sales grew 0.8% cumulatively in these 2 months while the group recorded growth of 5.3%. The group gained 80bps of market share over these months, including during the key Black Friday week. Performance improved significantly in December as group retail sales grew 15.5% (comparable store sales up 8.0%), at higher gross margin % than the prior year.
      The group achieved gross margin gains in each of its trading segments and in 8 of the 9 trading divisions during the Period.
      Retail sales for the group's corporate-owned stores was as follows:

Group retail sales grew 9.9% to R13.2bn and comparable store sales increased 4.1%. South African retail sales grew 9.3% to R12.3bn while non-South African corporate-owned store sales increased 18.1% to R964m. Total store sales increased 10.1% while online sales, which contributed 1.8% to retail sales, increased 2.9% during the Period, with a strong growth of 10.5% in December.
      Group retail selling price (RSP) inflation of 4.9% was well managed below CPI, despite more full-price items being sold as fewer markdowns were actioned in comparison to the prior year. Total unit sales increased 5.0% to 105.4m.
      The store footprint increased by 85 new stores and the group's total footprint expanded to 2 892 stores. Trading space increased 7.1% on a weighted average basis and 6.2% on a closing basis.
      Cash sales, which constitute 90.4% of total retail sales, increased 10.5%. Credit sales increased 4.6% as the group's strict credit granting criteria continued.
      Retail sales in the Apparel segment grew 11.7%. The group's largest division, Mr Price Apparel, reported strong double-digit sales growth and gained 150bps of market share, supported by the gain of 220bps in December. The division has now gained market share for five consecutive months. While sales growth was generally strong across all merchandise departments, the performance of kids was a standout and continues to bode well for the new Mr Price Kids concept, which now has 30 stores, and has the potential to be a significant retail chain in the group.
      The acquired apparel businesses continued to perform ahead of the market - Power Fashion delivered double-digit sales growth, gained 30bps of market share and achieved its highest market share level on record in December. Studio 88 grew sales by high single-digits during the Period against a very strong base.
      The Home segment's retail sales growth improved monthly throughout the quarter, with performances in Mr Price Home and Sheet Street increasing to mid-single digit sales growth levels in December 2023. Yuppiechef continued to report double digit sales growth.
      The Telecoms segment grew retail sales 9.0% and increased its market share by 70bps to its highest level on record, according to GfK (November 2023 latest data available).
      Other income decreased 16.3% to R301m due to the 2021 civil unrest insurance claim received in Q3 FY2023. Excluding this once off receipt, other income increased 7.0%, supported by higher debtors' interest and fees from the group's retail debtors' book.
      Closing inventory was 1.9% lower than the corresponding period.

Outlook
The South African GDP growth outlook for 2024 is likely to be constrained. The first half of the year is anticipated to remain challenging for consumers, although this could improve in the second half if inflation continues to moderate and interest rates start retracting.
      Although it was the group's intention to reflect negative stock growth at its March year end, this result is dependent on the outcomes of supply chain challenges:
- The Durban port congestion was disruptive to festive season trade, and this situation is expected to continue until the core challenges are successfully remedied. Currently the elevated level of risk has subsided slightly due to lower port demand post the festive season. - The instability of the Red Sea shipping route is increasing transit times. This has also resulted in increased shipping rates, however the group's rates are contracted until June.
      The group will continue to take the necessary action to mitigate the impact of these risks on trade.
      Management continues to focus on delivering profitable market share gains, by building on comparable sales growth momentum in its core business and ensuring that the acquired businesses keep performing and building scale.

New subscribers last week

Andy , Sales Representative, Carst & Walker, Durban, KZN, South Africa
Lionel Hughes, Business Manager, Chemtech Industriew, Sasolburg, South Africa
Wayne Haidlinger, Operations Manager, SA Dorper, Johannesburg, South Africa

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

Birthdays this week

29/01/1973: Nelesh Gulab, Shawney’s Shoes/Walk Tall, Johannesburg, Gauteng, SA.
29/01/1983: Zubairr Sadak, Shoe Talk, Durban, KZN, SA.
30/01/1948: Pravin Mistry, Super Star Fashions, Vereeniging, Gauteng, SA.
31/01/1961: Andy Williams, Agent, Cape Town, W. Cape, SA.
31/01/1971: Ashley Benjamin, NULAW, Durban, KZN, SA.
01/02/1947: Rob Steadman, National Trimmings Specialists, New Germany, KZN, SA.
01/02/1952: Thomas Bredenkamp, Promark, Pretoria, Gauteng, SA.
01/02/19??: Elaine Smith, the DTI, Pretoria, Gauteng, SA.
01/02/1969: Noeline Kemp, Knots, Bloemfontein, Free State, SA.
02/02/1941: George Geyser, Dancewell, Durban, ZN, SA.
02/02/1946: Chris Schroeder, retired, formerly PMC Group, Pinetown, KZN, SA.
02/02/1965: Rod Oliveira, Rodrigo Shoes, Durban, KZN, SA.
03/02/1963: Vusumzi Mabuto, NULAW, Port Elizabeth, E. Cape, SA.
03/02/1965: Grant Daniel, retired, formerly Mendelson Frost, Johannesburg, Gauteng, SA.

In memoriam this week

29/01/1998: Peter Buglass, NPI, Durban, KZN, SA.
30/01/2021: Manie Booysen, former MD of Seton SA, Nigel, Gauteng, SA.
31/01/2016: Rudi Geyser (b. 11/03/1937), EVA Industries, Durban, KZN, SA.
02/02/2018: Sam Foster, retired, formerly Barker Footwear, Cape Town, W. Cape, SA.
02/02/2021: Bernhard Manock (b. 07/07/1933), Manock Naturals, Durban, KZN, SA.
03/02/1977: Ismail Adam Moosajee (b. 28/08/1927), Seltex, Johannesburg, 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.

Directory entries updated this week

Anette Thompson Podiatrists, Umhlanga Ridge, KZN, SA.
Partisan Trading Company (Pty) Ltd, Johannesburg, Gauteng, SA.
Pries Man’s Shop/Movani, Benoni, Gauteng, SA.
Smart Steps [GM Stores cc], KwaDukuza / Stanger, KZN, SA.
Telmo Research, Durban, KZN, SA.
Vuysile Nkalani Podiatrist, Durban, KZN, SA.

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 (19 January 2024) - The average hide price decreased by 0.52% to R3.27/kg from R3.29/kg in the previous week. The current price is 0.49% higher than the average price a month ago and 21.2% lower than the average price a year ago. The range of prices reported was as follows: Minimum price: R3.14 Maximum price: R3.50. 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, and Zama Sangweni, 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:

Holiday Harbour Bay, Plettenberg Bay, W. Cape, SA. Women’s clothing retailer.
Holiday Makers Shop, Port Shepstone, KZN, SA. Men’s outfitter, family footwear and school wear retailer.

Contact us

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

Next newsletter: February 05, 2024. Ad and editorial deadline 02 February.

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

Our website www.svmag.co.za