S&V Weekly Newsletter Vol.11 No.17, April 29 2025

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Why scrapping a 0,5% VAT increase could stop much higher price increases

Noel Whitehead, Bolton Footwear CEO and SAFLIA chairman
Cape Town, W. Cape, SA – The rebound by government on the 0,5% VAT increase is positive for the footwear industry.  Whilst some might argue it will have a neutral impact on the industry, it will certainly impact more positively than negatively.
A 0,5% VAT increase would have the following ramification on the shoe industry.  For example, if a retailer has a shoe on the shelf at say R899 including VAT, the net amount the retailer receives is R781,74 (R899 minus 15% VAT).  If the retailer requires a margin of 40% (only for illustration purposes) then it equates that the retailer is paying R469,04 excluding VAT for the shoe.
       With a 0,5% increase in VAT to 15,5%, and assuming the retail selling price remains at R899 including VAT, the retailer would sacrifice R3,38 per shoe as the net amount they would receive would drop to R778,36 from R781.74, resulting in their margin dropping, albeit  marginally,  to 39,74%, assuming the manufacturer has not increased the wholesale price excluding VAT.
       More often, what happens in this case, the retailer increases the retail selling price to ensure they do not sacrifice their margin.  For example, they could increase the price of the shoe to R929 or even R949.  With any increase in the retail price point, already cash strapped consumers buy less due to their monthly “basket” (goods and services) having been impacted by the VAT increase and rising costs.  Even if the sales volumes reduce by say 1 or 2% due to the increased sales price, then the manufacturer loses.  Further compounding the negative effect of a 0,5% VAT increase is that the wholesale price would most likely increase due to the hike in operational costs of manufacturing such as electricity, rates & taxes, insurance, etc.  These costs cannot be absorbed by the manufacturer and inevitably push up the wholesale price of a shoe, subsequently passing those costs on to the retailer and ultimately the overburdened consumer.
       In conclusion, the decision to halt the 0,5% VAT increase is not only welcome but is some positive news for manufacturers in an ailing economic climate.

Wage negotiations

Wage negotiations: Second rounds in May

Durban, KZN, SA – The first rounds of wage negotiations earlier this month in the General Goods & Handbags Sector (on 01 and 02 April) and in the Footwear Sector (on 14 and 15 April), ended without agreement, according to Ilhaam Ryneveld, general secretary of the National Bargaining Council of the Leather Industry of SA.
     The second round of the General Goods & Handbags Sector is on 07 and 08 May, and the second round of the Footwear Sector is on 13 and 14 of May.
     The Tanning Sector last year signed a 2-year agreement.

Retirement

Pretoria, Gauteng, SA – Dr Jaywant Irkhede, director of Footwear & Leather at the Department of Trade, Industry & Competition (DTIC), retires at the end of April, having started with the then DTI on 01 June 2011. An article on his career with the DTIC, and his influence on the SA leather industry value chain, will appear in the May issue of S&V Footwear & Leather Goods.

In case you missed it!

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

CLICK HERE TO VIEW IT ONLINE

S&V Footwear & Leather Goods Magazine Vol91 No4 April 2025

IN THIS ISSUE:

03 Upfront
- Following Trump’s tariff hikes, can mass shoe production actually be moved back to the U.S.? The answer is – it’s not that simple, says Footwear News.
- 40 000 retail doors could close by 2029, but footwear stores could hold their own, says Footwear News.

09 Headlines with Tinashe Mandirahwe
- Can Nike’s new CEO revive sales?

11 Counterfeits & IP
- Traditional Guinea Leppi fabric now officially recognized as a ‘Protected Geographical Indication’.

13 Noticeboard
- Obituary: Denis Manning, formerly of Kronies Footwear and Trenzado Footwear, was hail-fellow, well-met, in a genuine way.
- Obituary: Tony Jelinski, a ‘mouse’ who was in every way outsized.



Advertisers in this Issue
Arena Trims (06), BBF Safety Group (04), East Asian Import & Export (OFC), Freestyle Genuine Handcrafted Leather (02), Haesloop Agencies (08), Kaytex Belts (12), Leather Finishing Products (10), Saddler Belts (09), SAFLEC (13), S&V Calendar (01), S&V Directory (05), Shotland Packaging (14).
 

They Said It

"We’ve never worked short time, but today we are." - Keith Lyons, Strayz Footwear, Durban, KZN, SA, on Friday.

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

New subscribers last week

Umesh, Director, Strand street outfitters, Port Elizabeth, Eastern Cape, South Africa

Birthdays this week

29/04/1951: Elizabeth Loubser, retired, formerly Bolton Group, Great Brak River.
29/04/1980: Mark Fraser, Claw Boots International, Johannesburg, Gauteng, SA.
30/04/1959: Gustav Franzsen, Vinaco, Cape Town, W. Cape, SA.
30/04/1964: Hayley Roberts (nee Caro), Retailability, Durban, KZN, SA.
30/04/1985: Gert Bosch, Bosch Technical Services, Cape Town, W. Cape, SA.
01/05/1931: Bill Ramage, retired, formerly Apeco [closed], Cape Town, W. Cape, SA.
01/05/1932: George Wilkens, emigrated, formerly Martin Johnson [closed], Pietermaritzburg, KZN, SA.
01/05/1961: Ronell Nieuwoudt, Suzi Q, Phalaborwa, Limpopo, SA.
01/05/1962: Tanya Vosloo, Greystone Trading 387, Cape Town, W. Cape, SA.
02/05/1956: Dave Robertson, emigrated, formerly Bushy Marketing, Pinetown, KZN, SA.
03/05/1949: Sam Wells, Malome Leather Technologies, Boksburg, Gauteng, SA.
03/05/1951: Ron Rink, retired, formerly Puma, Cape Town, W. Cape, SA.
03/05/1953: Alex Leith, left the industry, Durban, KZN, SA.
03/05/1964: Rafique Vahed, Fashion Extreme, Estcourt, KZN, SA.
03/05/1972: Afzal Deedat, Speed Zipper, Durban, KZN, SA.
04/05/1940: Isaac James, retired, formerly Step High Shoe Boutique, Cape Town, W. Cape, SA.
04/05/1948: Martin Nefdt, agent, Port Elizabeth. E. Cape, SA.
04/05/1954: Norman Zoghby, Atlantic Protective Clothing, Johannesburg, Gauteng, SA.

In memoriam this week

30/04/2012: Ebrahim Aboo (b. 07/08/1948), MG Shoes [closed], Pietermaritzburg, KZN, 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 last week

African Tannery Company (Afritan), Bujumbura, Burundi.
Creative Leathergoods Manufacturers (Pty) Ltd, Durban, KZN, SA.
K.G. Chapaner & Co. (Pvt) Ltd, Gweru, Zimbabwe.
La Camorra (Pty) Ltd, Cape Town, W. Cape, SA.
Mendelson & Frost Tanning Services Division, Johannesburg, Gauteng, SA.
SA Crocodile Investments (Pty) Ltd, Elandsfontein, Gauteng, SA.

Fairs & events updated last week

23-25 May 2025: All African Leather Fair, Addis Ababa, Ethiopia.

3. Malawian Kwacha (MWK) (buying)

Source: https://www.rbm.mw/

4. Zambian Kwacha (ZMW) (buying)

Source: https://www.boz.zm/

5. Zimbabwe Gold (ZiG)

Source: Source: https://www.rbz.co.zw/

Note: For previous rates, see HERE

ABSA Agri Trends: Hides & skins prices

Johannesburg, Gauteng, SA (17 April 2025) – The current average hide price increased by 0.03% to R2.8057/kg from R2.8049/kg a week ago. The current price is 0.30% higher than the average price a month ago and was 12.7% lower than the average price a year ago. The range of prices reported was as follows: Minimum price: R2.75 Maximum price: R3.09. 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, 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:

Hafde Ethiopian Leather, Addis Ababa, Ethiopia. Tannery and footwear and leather goods manufacturer.
Halsted & Co. (Pty) Ltd., Boksburg, Gauteng, SA. PPE distributor.

THIS WEEK LAST YEAR!

Temu pulls safety footwear from its SA site, SAFLIA says it’s going after other noncompliant suppliers

Caprini: ‘Restarting for summer’

Death notice: Leather technician Ken Moakes

In case you missed it! : The April issue of S&V Footwear & Leather Goods Magazine

READ IT HERE - S&V Weekly Newsletter Vol.10 No.18, April 29 2024

THIS WEEK FIVE YEARS AGO!!

Restarting manufacturing and retail: Details expected this week

UIF: Few payments to Leather Bargaining Council employers so far

Palm Footwear: Making masks

Stock Exchange News Service (SENS) : Steinhoff: Update on Covid-19

SAFLEC arranges Zoom Cloud Trend Seminars via Arsutoria.

READ IT HERE - S&V Weekly Newsletter Vol.6 No.17, April 27, 2020

Contact us

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

Next newsletter: Monday 5 May, 2025. Ad and editorial deadline Friday 2 May.

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

Our website www.svmag.co.za