“Beauty is truth,” as the poet said. He failed to mention that it was also cold, hard cash, as the parents of any fourteen-year-old daughter could tell you. And indeed as Woolies CEO Roy Bagattini would aver: the segment has absolutely shot the lights out for the business, with +20.6% sales growth for the 18-weeks ending in November, despite the port congestion and product availability challenges experienced earlier in the period. Also, despite fierce competition from the bevy of bargain beauty specialists that have sprung up online. “The proliferation of low-cost online retailers into the SA marketplace has had significant impacts on the retail landscape, driven in part by a lack of regulatory oversight. It is undeniable that the ease with which they were able to access the market highlights local weaknesses,” argues Signore B. Overall, the business experienced sales growth of a more modest +6.5%, while food was up a not-unexpected +12.1% given the dominance Woolies enjoys in high-end comestibles.

Comment: Woolworths has a clear plan to grow its beauty segment, with high-end brands and innovative services now on offer. An excellent channel for suppliers with aspirations in this direction. And if you do have such aspirations, you cannot afford not to <a href="https://www.tradeintelligence.co.za/Content/Health-and-Beauty-Report"><strong>have a look at our latest Health and Beauty report right here</strong></a>.

That Woolies dark store in Cape Town’s City Bowl we mentioned not so long ago – a big hit, apparently. “The dark store drives improved productivity and efficiency, as the space and format is geared to online picking and our online team can scale to increased demand more easily,” says a (suitably anonymous) Woolies spokesperson. “We can put more order volumes through a store where we don’t compete with in-store shoppers for either aisle space or product availability.” And according to Woolies online and mobile director Liz Hilock, “Investing in dark stores is testament to our focus on creating a future-fit omnichannel offering, that leverages and transforms existing assets to continuously improve our customer’s experience […] Woolies Dash complements our already expansive online service, from our scheduled delivery service with a broad regional footprint to our drive-through click-and-collect service.” Woolies Dash grew +71% in the last FY – it will be interesting to see what effect dark stores have if more are rolled out. And here’s a fun fact we can keep in mind: Shoprite alone has created somewhere north of 11,000 jobs in the food delivery sector since the launch of Sixty60.

Comment: How are suppliers optimising their own production and supply chains to serve these burgeoning delivery services?

Woolies results this week, for the year through June, and if you’re looking for a bellwether of the encouraging resilience of the better-heeled, you should perhaps stop reading: turnover grew a less-than-inflationary +4.3% to R76.4bn, with operating profit – for us, a solid measure of how things are going – down 14.4% to R5.8bn. On the upside, Food saw a +9% sales increase, through organic growth, a +52.8% surge in online sales (largely from Woolies Dash, which grew +72.1%, soon to be assisted by the rollout of dark stores) and the Absolute Pets acquisition. Fashion, Beauty and Home, on the other hand, struggled with a 0.4% sales decline, impacted by poor product availability and increased competition, notably from online retailers like Shein and Temu. CEO Roy Baggatini, who has had his contract extended indefinitely, sounds characteristically sanguine about it all. “We have a number of newer avenues for growth,” he says. “But what we’re doing here is really leveraging our existing world-class core capabilities […] to now build a market-leading food services business.”

Comment: Essentially, Woolies is discovering the hard truth that when tough economic conditions come for the professional classes, upscale retail becomes discretionary.<a href="https://www.tradeintelligence.co.za/App/Uploads/File/0/0/195739/240904_Woolworths%20FY2024%20Results%20Summary.pdf" target="_blank"><strong> More on these results in another great summary from our team here</strong></a>.

A win from Woolies against an appeal from vet and farmer Dr Tod Collins, who disputed a seemingly innocuous statement by the former on the grounds that it was deceptive. “When only rBST hormone-free will do. Tested and audited, so you know what’s in your milk,” said the Woolies payoff. Dr Tod argued that the use of the term “hormone” did not adequately inform consumers about the difference between safe and potentially harmful hormones, questioned whether Woolworths’ claims of testing and auditing could be substantiated, and contended that the advertisement implied that competitors’ milk contains rBST. The Advertising Appeal Committee found no evidence that the ad misled consumers, accepted Woolies’ evidence showing that rBST could be tested for, and concluded that the advertisement did not play on consumer fears.

Comment: Fascinating, and cautionary for any business making scientific claims. Nice to see Woolies vindicated for a change too.

DataEQ, which takes a unique approach to structuring social media data through the synergy of AI and human intelligence, has released its latest South African Retail Sentiment Index, showcasing consumer perceptions of the nation’s top grocery retailers as expressed on social media. Bottom line: Woolies wins. The caveat is that of all retailers whose mentions were surveyed – Checkers, Pick n Pay, Shoprite, SPAR, and Woolworths – the Dapper One saw the smallest improvement and declined in the pricing category to third behind Shoprite and Checkers. Retailer house brands got a big nod from punters, but perceptions declined for all in customer service. The good news, industry-wise, is that the ‘Net Sentiment’ for the sector was up 5 points, driven by improvements across all of them. Net Sentiment is a real-time customer satisfaction metric that is measured by collecting unstructured text from publicly available online conversations.

Comment: Checkers may step up to the plate. Other retailers may offer better value. But Woolworths remains the gold standard of a larney place to shop.

Like the albatross hung around the neck of the Ancient Mariner, the David Jones entanglement continues to haunt Woolworths, both coming and going. Its ownership of the troubled Australian retailer was unprofitable and unpopular; its disposal of the failing asset has been protracted, and now, it turns out, the initial acquisition was irregular in the eyes of SARS. Woolies funded the R21bn deal through a combo of existing cash, new debt facilities and equity funding raised by a rights offer. An equity bridge facility (something we pretend to understand only dimly) was to be repaid with the proceeds of the rights offer. Woolies was advised by its tax people that it could claim input tax on certain amounts paid in relation to the acquisition and submitted its VAT returns accordingly. SARS disputed the resulting deductions, and the tax court found in favour of Woolies. Now SARS has gone to the Supreme Court of Appeal, which will hear the matter later this year.

Comment: Australia is the graveyard of the wild entrepreneurial enthusiasms of otherwise sensibly managed South African businesses.

The Competition Commission has tipped its battered grey fedora in the direction of Woolies, giving the Posh One the go-ahead for its acquisition of a 93% stake in Absolute Pets from Sanlam Private Equity and Absolute Pets management. This gives Woolies a 150-store footprint in a lucrative and growing category, with plans to open more. “Our customers are certainly spending a lot of money on their pets and we want to provide them with the absolute best experience,” notes CEO Roy Bagattini. Woolies has been on an expansionist tear of late through its new Woolworths Ventures vehicle, accelerating the rollout of pet care, food services (WCafé), standalone liquor (WCellar), and small store clothing formats (WEdit clothing). In less welcome Woolworths news, the business has announced the retirement of Zyda Rylands as CEO of Woolworths Foods. She had previously served as CEO of Woolworths SA until the position was canned on the ascension of Bagattini. She ran Woolies Food as MD from 2010 to 2015 and is widely credited with building the platform for the success of that division. She will be replaced by CEO of Woolworths Financial Services Sam Ngumeni.

Comment: An exemplary career, and a business that seems to be on the up.

This is some very snappy headline-writing and no mistake: “Iconic Taste brand embraces a digital-first future.” How about: “Taste mag goes kicking and screaming into online-only format”? Whatever the feelings of the actual journalists over at Taste, the brand itself still seems very much a part of the Woolworths communications bundle. After launching on TikTok just a year ago, Taste has over 225,000 followers on the platform, with some videos reaching over five million views. “We were able to maintain and build on Taste’s digital success during lockdown and the audience has told us where they are,” asserts editor-in-chief Kate Wilson. “Now we need to be able to speak to them more often with even more content. That requires a single-minded approach.” Taste magazine was launched in 2003, and its 190th issue due to be published in July/August 2024 will be the brand’s final printed magazine.

Comment: It's not so bad. We at the Tatler have been online for the better part of 20 years, and we still earn our daily crust.

Those Woolies interims you were asking about. Turnover was down an eyewatering -23.6% to R38.1bn but hold your horses: revenue from continuing operations – i.e. excluding the loss of sales from the disposal of David Jones in Aus – was up +5.4%, with the core Food business up +8.4%, supported by on-demand service Dash. Fashion, Beauty and Home grew a significantly more muted +2.2%, while sales at Country Road declined -5%. Gross profit was up +4.0% to R13.8bn, but operating profit from continuing operations was down -12.1% as expenses grew +9.9% to R10.9bn. A setback, admits Roy Bagattini, but not one that is going to set the business back. And he has plans: “We have recently launched Woolworths Ventures, a dedicated team and simplified processes that will bring exclusive focus to our strategic growth initiatives,” he says, “accelerating new revenue streams and harnessing the potential of our talented people to attract new customers to our trusted Woolies brand.”

Comment: For more data and insights on the Woolies interims, have a look at this <a href="https://www.tradeintelligence.co.za/App/Uploads/File/0/0/194580/240228_Woolworths%20HY2024%20Results%20Summary.pdf" target="_blank"><strong>excellent summary from our analysts</strong></a>.

To be clear: the endgame is not microchipped shoppers or tattoos on foreheads. Unless that’s your thing. But it is true that Woolworths, having put the pigeon among the trolls last month by announcing that WCafé’s would now be going cashless, has gone ahead and reduced the number of tillpoints accepting cash in actual Woolies stores. Currently, only a quarter to a third of tills at stores now accept both cash and cards. The rest have ‘cards only’ signage. The downside to this is the occasional logjam of cash-wielding punters at the front of the queue. This approach by Woolies reflects the reality that cash transactions at its stores are “likely less than 20% by volume and easily below 10% of value”. The benefits to the business are somewhat nebulous – smaller cash floats and less likelihood of armed robbery in stores.

Comment: But it does give shoppers with an axe to grind an excuse to go elsewhere – like Checkers, which is making a play for SA’s wealthier shoppers.

A profit warning from Woolies, who expects its half-year haul through December to decline by as much as -10%, as Group turnover increased +5.4%, or +4.4% in constant currency terms – less than half the 12.5% reported in the prior period. What gives? Consumers are pulling back on spending on clothes, say Woolies, against a backdrop of broader macroeconomic uncertainty. The energy crisis and the less reported but just as dire logistics debacle have also impacted the retailer’s ability to consistently get the right stuff in front of the right people. “This has negatively impacted footfall, resulting in a greater-than-expected pullback in discretionary spend,” says Woolies. On the upside, the business enjoyed better sales in the last six weeks of the reporting period, with numbers up +7.2% as the effects of Black Friday and the festive season kicked in. Turnover in Food rose +8.4%, while sales at its Fashion, Beauty and Home business grew by +2.2% due in part to summer stock being held up in (or outside) congested ports.

Comment: Another business with a recent run that reveals it is doing nothing wrong. And yet here we are.

A profit warning from Woolies, who expects its half-year haul through December to decline by as much as -10%, as Group turnover increased +5.4%, or +4.4% in constant currency terms – less than half the 12.5% reported in the prior period. What gives? Consumers are pulling back on spending on clothes, say Woolies, against a backdrop of broader macroeconomic uncertainty. The energy crisis and the less reported but just as dire logistics debacle have also impacted the retailer’s ability to consistently get the right stuff in front of the right people. “This has negatively impacted footfall, resulting in a greater-than-expected pullback in discretionary spend,” says Woolies. On the upside, the business enjoyed better sales in the last six weeks of the reporting period, with numbers up +7.2% as the effects of Black Friday and the festive season kicked in. Turnover in Food rose +8.4%, while sales at its Fashion, Beauty and Home business grew by +2.2% due in part to summer stock being held up in (or outside) congested ports.

Comment: Another business with a recent run that reveals it is doing nothing wrong. And yet here we are.

A trading update from Woolies for the 20 weeks through 12 November, and the big news is that online food sales have surged by +46.2% and now contribute a statistically significant 5% of total South African sales. Group revenue was up a more muted +4.7%, affected by such factors as the Western Cape taxi strikes, congestion at ports, and the impact of the avian flu on the availability of key products. In other news, with implications perhaps for the wider industry, Woolies has taken imported Israeli pearl couscous off its shelves in response to credible threats it has received, and not, the retailer emphasises, because it supports a boycott or is pro-Palestinian. “Many of us have been deeply affected in various ways by the atrocities and death of innocent people we are witnessing on our screens. Intolerance is on the rise and, we as an organisation, cannot and will not add fuel to the fire, and will always continue to seek ways to bring people together,” read a statement from the business.

Comment: Conflict in the Middle East always has wider implications. But in this instance, businesses and individuals alike are being called on to take a position they may not wish to take, one way or the other.

A big acquisition from Woolies this week, the first since (check notes) it went on an ill-advised buying spree in the blasted Antipodes. This one seems solid though: 150 Absolute Pets stores, from Sanlam Private Equity and Absolute Pets management, who will be retained for the running of the business, and who will for now keep the 6% Woolies didn’t buy. “The Absolute Pets brand has earned the trust of pet owners across South Africa, and I am truly excited by the opportunities our partnership brings to leverage our joint strengths and expertise to provide even more customers with the best overall pet service and experience in the market,” said top-dog Roy Bagattini. Absolute Pets stocks a comprehensive range of foods and other essentials, offers spa services, and has a well-established online offering. The acquisition comes two years after Shoprite opened its first standalone Petshop Science; it has 50 now.

Comment: A sound buy – a proven business which will no doubt benefit from Woolies’ supply chain efficiencies and economies of scale.

Inserting itself into the South African dialogue this week is Woolies, which has announced a partnership with the Desmond & Leah Tutu Legacy Foundation to convene a national conversation about our identities and ways in which we can reimagine how we belong together as a society. This collaboration aims to ignite a nationwide dialogue around belonging, focus attention on the rich tapestry of identities within our society, and foster meaningful, inclusive conversations that strengthen our shared humanity. In practical terms, the initiative will launch with a panel discussion on identity and belonging in South Africa on 25 October, bringing together such luminaries as Lwando Xaso, Dr Buhle Zuma, and others willing to embark on a courageous conversation addressing the process of reimagining who we can be together as a society. The panel will be followed by a multimedia storytelling campaign, launching early in the new year, which will explore some aspects of discrimination that manifest in South Africa.

Comment: Intriguing, timely, and hopefully a small but important step towards a country where everyone feels they truly belong.

Let’s delve a little deeper into those Woolworths results we covered briefly last week. Turnover for the year through June was up +7% to R85.7bn in what the business describes as a transformational year, with operating profit increasing +13.8% to R6.6bn. The disposal of David Jones not only took R18bn in liabilities off the balance sheet, and more importantly has reduced the cost base by R10bn per annum, shifting focus and energy more squarely to the local business. Sales were up +8.9% in Fashion, Beauty and Home, ahead of the market, and +8.5% in Food, supported by improved on-shelf availability and increased footfall, and despite the impact of load shedding. “I think our objective over the last couple of years has really been to restore Woolworths to what we think is its rightful place – not only in the minds of our customers, which we continually do day in and day out, but particularly in the minds of our other stakeholders and our shareholders in particular,” says CEO Roy Bagattini, who it increasingly seems was an inspired hire.

Comment: A great, and lighter, South African business on the comeback trail in tricky times.

A great set of financial results from Woolies for the year through June, and since ditching the rusty anchor that was David Jones, things are starting to look a little rosier. This was evident across a range of metrics and no less so than in its HEPS – a generally accepted indicator of profitability – which came out 35.6% higher for the year. The completion of the sale of the crusty Australian department store in March this year took around R18bn in liabilities off the Woolies balance sheet, leaving the Dapper One to refocus its efforts on building profitability in other business areas. Looking now at the individual business units, Food growth accelerated throughout the year, but particularly in H2, while Fashion, Beauty and Home grew +8.9%, and is reportedly “trading ahead of the market”. And although Australian shoppers are under pressure, the Country Road Group came out positively thanks to a very good start to the year. The Group is looking forward to its next period of investment and growth, with a planned CAPEX spend of R10bn over the next three years.

Comment: The ship has been steadied, now comes the time to set sail on the high seas. For more on yesterday’s results, read our handy and informative summary <a href="https://www.tradeintelligence.co.za/App/Uploads/File/0/0/183313/230830_Woolworths%20FY2023%20Results%20Summary.pdf" target="_blank"><strong>here</strong></a>.

Woolies has taken the usual amount of social media flak as it launches its month-long WPride campaign, with pride-themed apparel in the rainbow colours and messages of LGBTQ+ ally-ship on some of its comms. “Just remember what happened to Budweiser and Dischem, where unacceptable behaviour was punished by normal people,” spluttered one twitter scribe, while others are threatening to boycott Woolies completely. Woolworths for its part seems determined to stay the course. “We are committed to promoting spaces in which everyone is accepted, protected, respected, and celebrated, regardless of where they come from, what they look like, who they love, or how or whether they worship,” they said. “During International Pride Month, our WPride campaign acknowledges the extent to which certain groups in our society are marginalised by celebrating the LGBTQIA+ community.” According to Statista, South Africa is the most LGBTQ+ friendly country in Africa and is the only country in Africa where same-sex marriage and partnership are legal.

Comment: Social media has a way of amplifying the angriest voices. It’s a dangerous tool we should use with greater circumspection.

Woolworths continues to power its delivery fleet with an exciting new energy source called ‘electricity’, which is intermittently available at various locations around South Africa. (Enough. Ed.) True, though: in partnership with DSV and Everlectric, Woolies has added 41 fully electric panel vans to its online delivery fleet to reduce its carbon footprint, promote sustainability in the retail industry, and, presumably, advance its Good Business Journey. The vans can do up to 300km per charge; currently the Woolies fleet does between 150km and 220km a day. Additionally, they come equipped with ‘live advanced telematics’, maximising their operational efficiencies, increasing their daily range, and remotely limiting power and speed to ensure driver safety. Annually, the vans have the potential to save over 400,000 kgs of tailpipe carbon emissions, since they will derive much of their power from DSV’s extensive solar infrastructure at its Gauteng and Cape Town facilities.

Comment: Sometimes we need to catch our breath and marvel at the pace at which the renewable revolution is moving.

Some more detail on those Woolies interims that we reported on last week: Group turnover and something it insists on calling “concession sales” up +18.5% for the six months through Christmas, with HEPS up just northward of +75% as expected. Fashion, Beauty and Home was the big performer, with turnover up +11.2%, while Food grew only +7.6%, or +5.4% on a like-store basis. Load shedding costs the business around R15m a month, but with 99% of the real estate now covered by generators and renewables, it is at least somewhat cushioned from the worst impacts of load shedding. Moreover, they say, it has exclusive arrangements with the majority of its food suppliers. “This places us in a favourable position to build a holistic, integrated and fully resilient response plan from here,” Woolies points out. The Group also warned that as things settle in Aus, and as South African consumers continue to feel the strain, things might slow down profit-wise in the second half.

Comment: Woolies had us worried for a while back there. But it seems to be turning things around, and rather nicely too.

Kicking off our slew of financial results and trading updates is none other than Woolies’, who presented its interims for the six months through 26 December just shy of 24 hours ago. Raking in R1bn during the Christmas week alone was the Food business, which after a disappointing FY22 seems to have got at least some of its spark back at +7.3% growth in the half. And in what the Group can finally call a turnaround, Fashion, Beauty & Home sauntered down the runway at +10.7%, something that just a few reporting seasons ago seemed but a pipe dream. But what of its Antipodean assets? Well, just as David Jones finally returned to profitability, the Group still firmly believes that its sale will be “transformational”, allowing it not only to ditch a chunk of debt but also focus its efforts on other business areas that make more strategic sense. Under the quiet but apparently steady hand of CEO Roy Bagattini, the Group has expressed optimism about the prospects for the rest of the 2023 FY while cautioning that it will be a tough one due to the many, many external factors that we are quite frankly tired of mentioning, so we won’t.

Comment: Good stuff all round from The Dapper One, who we are very glad to see has pulled out its smartest suit once again. But you can read more about those results in our <a href="https://www.tradeintelligence.co.za/App/Uploads/File/0/0/171819/230301_Woolworths%20HY2023%20Results%20Summary.pdf" target="_blank"><strong>snappy little summary here</strong></a>.

The week before Christmas, Shoprite CEO Pieter Engelbrecht sold R20m in the company’s shares, apparently as part of the “annual rebalancing of his investment portfolio”. And presumably to free up some cash for last-minute stocking stuffers. Shoprite shares went up 13% last year, as did Pick n Pay’s (13%), but the two were well behind Woolies (29%). In the same week, but otherwise unrelated, Pick n Pay trialled a new pick-up counter for Takealot customers in its Table Bay Mall store, reaching collection capacity within two days, strongly suggesting the potential of the concept in a country where home delivery isn’t what it might be for some punters. Woolies is also stepping up its online game, announcing a partnership with logistics outfit Pargo, enabling punters to pick up their fashion, beauty and homeware orders at nearby Pargo click-and-collect pickup points. Finally, Nielsen reveals that Checkers enjoys some 47.1% of SA’s vegan and plant-based market with 49.9% of all frozen, plant-based and vegan sales and 44% of ambient.

Comment: Some interesting initiatives from our major retailers as we enter this brave new year.

Woolworths Holdings is pleased to announce that it has entered into an agreement to sell its appalling David Jones investment to the imaginatively named Anchorage Capital Partners, an Australian private equity outfit – but interestingly, will retain ownership of its flagship property asset in Bourke Street, Melbourne, which it will lease back to David Jones on a long-term basis and competitive terms. Significantly for Woolies, the new owners will take on R17bn in liabilities relating to the David Jones store portfolio, enabling Woolworths to deploy its resources and focus on other more profitable endeavours. Says an almost audibly relieved Roy Bagattini, “This is a major milestone in the repositioning of WHL for growth, while simultaneously improving return on capital for our shareholders. The strategic rationale at the time of the acquisition did not materialise to the extent originally envisaged. While David Jones has successfully executed on its turnaround… now is the right time for the business to operate under new ownership.”

Comment: About blinking time. Stick to the very classy and historically profitable knitting, Woolies.

A trading update from Woolies, who has indicated that sales grew +23.3% for the 20 weeks ended 13 November compared with the same period last year. Fashion, Beauty and Home (FBH) increased revenue by +10.8%, with food up +7.3% and growing trading space by +3.2%. This despite load shedding, which impacts the business in lost sales, wasted produce, and an increase in spending on diesel to keep the gennnies running and the lights on. Downunder, things seem to be on the up and up, with sales at David Jones’ increasing by +55.3%, and at Country Road Group by +36.2%, thanks to the launch of new ranges at both. As punters in that blasted geography returned to stores, online sales declined by -13.7%. Back home in the Beloved Country, FBH online sales grew +1.5% while Food rose +26% as the business continues to focus on expanding its Dash on-demand offering. Woolies expects that half year HEPS – a widely accepted measure of profitability – will likely increase by more than +20% when the full results come in.

Comment: A great South African business makes a comeback. Had us worried for a bit there, buddy.

Woolies also released its results last week, and while the numbers appear uninspiring at first glance – with turnover up just +1.7% to R80.1bn – the underlying story is one of tentative recovery from a difficult ambit. While Food – traditionally the handsomely-packaged jewel in the Woolies crown – was up just +4% to R39.9bn, Fashion, Beauty and Home came through at a pleasing +5% up to R13.6bn. And losses at the underperforming Aussie assets (Aussets? No. Ed.) seem to have been arrested, despite a crippling three-month lockdown in the first quarter, with David Jones now treading water rather than sleeping with the fishes, and Country Road on a promising growth trajectory. Still, the consensus among the gimlet-eyed analysts is that the Aussie acquisition was an unforced error (similar to Nick Kyrios’ many just the other night), and that there are rumblings in the Antipodean press of some sort of sale afoot. Woolies, as usual, are not saying anything either way.

Comment: The full recovery of this icon of South African retail will cause us all to breathe more easily. In the meantime, more details on <a href="https://www.tradeintelligence.co.za/App/Uploads/File/0/0/170393/220831_Woolworths%20FY2022%20Results%20Summary.pdf" target="_blank"> <strong> those results over here</strong></a>.

Slow news week, so a quick check in with, let’s see, Woolies, from whom we haven’t heard much lately. Did you know, for example, that it has exclusivity arrangements with suppliers of their multitudinous private label lines, many of these arranged with a handshake, many years ago. Such suppliers include the Rhodes Food Group, Libstar and Interfoods. For their limited range of branded goods, naturally, such restrictions do not apply. And speaking of private label: there is currently a dearth of suppliers to meet the growing demands of the major retailers in a time of tightened belts – surely an opportunity for businesses wishing to grow their sales. Woolies is currently upping its game as the craze for mealkits drags on, launching a more upmarket range of recipe boxes as Ucook, Takealot, Daily Dish and even Netflorist bring the heat in this contested novelty space. And finally, the ongoing success of Woolies Foods has been buoyed over the past couple of difficult years by its investment in price, particularly in the poultry category, where South Africans are always on the hunt for value.

Comment: Challenges abound for this iconic South African brand. But if it loses its disastrous Aussie assets and aligns the rest of the business in support of its flagship food offering, it will weather the storm.

Bringing some excitement to the arguably staid world of road transportation this week is Woolworths, which has just announced that it intends to roll out – if that’s the expression – a fleet of delivery vehicles of which 70% will be electric. This follows the global example of such businesses as UPS and Amazon and will save the retailer (and the planet) an estimated 700,000kg in emissions annually (the average van emits 150g – 190g of CO₂ per kilometre, so you do the math). “This latest investment in electric panel vans, enables us to continue to grow our online business and deliver the Woolies difference, but with a lower carbon footprint,” says head of online and mobile Liz Hillock. The initiative is a partnership between Woolies, transport and logistics outfit DSV, and electric vehicle and charging technology crew Everlectric, and is aligned with the Group’s goals to achieve net-zero carbon emissions by 2040. Where it’s unable to charge using renewables, it will buy Renewable Energy Certificates (RECs) which certify that the power it draws from the national grid is in fact green.

Comment: Home delivery, with its relatively short ranges and smaller vehicles, is an ideal platform for the development of this sort of approach to logistics.

Kudos to Woolies, which, it was recently announced, is a winner of Oracle’s Change Agent Sustainability Awards, given to businesses which incorporate sustainability into their operational strategies – notably by using Oracle tech and products. Looking to advance its Good Business Journey, a commitment that spills into every product, Woolies deployed the Oracle Retail Brand Compliance Management Cloud Service (ORBC) to capture all food sustainability-related product data and report on those metrics. “As part of our GBJ commitment it is imperative for every product sold at Woolworths to have a sustainability attribute,” explains Latiefa Behardien, Woolworths Foods Chief Technology and Sustainability Officer. “This attribute needs to be identified, measured, independently audited and reported on in our annual GBJ report. Capturing these attributes in the Oracle Retail Brand Compliance Management Cloud Service has transformed our reporting systems.” Woolies joins as a recipient outfits like Japan’s Ministry of the Environment for its work in energy-efficient utilities and Boston-based Oceanworks, which has created a global marketplace for recycled plastics.

Comment: With sustainability it’s not just the why and the what that’s important, but as demonstrated here, the how.

There was a time when if you wanted a pair of Levi’s 501s you’d have to go down to Grey Street on a Friday after school and drive a hard bargain with the sharp-eyed sales assistant at Kalidas Extension and still pay twice what you would for the equivalent pair of Lees. Now you can get those still sought-after trousers at Woolies, in an increasing number of locations. This is called progress. Where were we? Ah, yes. Massmart has joined up with credit solutions provider and BNP Paribas subsidiary RCS to offer further benefits to punters using store-branded credit cards to shop either online or in store at Builders, Makro and Game. And finally, in news of the monstrous, Pick n Pay is now offering something called Pink Tiger lemons, which are exactly what they sound like – striped, pink fleshed, sweeter and with exciting floral notes that will make them the darlings of dessert-makers and pourers of gin everywhere. Sourced from Spain, they will be slightly more expensive than your run of the mill, sour, yellow variety.

Comment: Truly, we live in a time of wonders, if we’re prepared to stretch our supply chain a touch.

A tough set of interims for Woolies, no point in sugar coating it. Overall, turnover shrank -2.1% to R42.1bn for the six month through December, with operating profit -18.9% to R3.1bn. Operating margin at 7.9% was also down a couple points across all segments. Food sales, generally the star in the Woolworths financial firmament, were +3.5%, pipped to the post by Fashion, Beauty and Home at +3.9%. On the upside, online sales were +22.4%, contributing 13.7% to overall sales, boosted by a draconian lockdown in the blasted Antipodes. All of this was characterised by FD Reeza Isaacs, as “a solid performance in what continues to be an increasingly competitive space and against a very tough macro background” – a background whose specific features over the past couple of years do not bear repeating, and which have affected all retailers more or less equally. What next? According to Roy Bagattini, continued adherence to the Group’s 2021 strategic framework, innovation, new formats, accessibility of brands and product ranges and the pursuit of ‘white space’ opportunities, including takeaway.

Comment: The challenge for Woolies is the encroachment on its premium space by Checkers.

Over the holiday season, you may recall, Woolies was on a fundraising drive among its punters, under the banner of its “Take a moment to make a difference” campaign, to raise cash for the various initiatives it supports as part of its food security strategy. A not inconsequential R2.5m was raised, and went to various worthy projects, including:
- Afrika Tikkun Foundation, which supports young entrepreneurs in Gauteng and Western Cape in starting their own agriculture businesses;
- Inmed South Africa, helping unemployed young people in the Free State who wish to start climate-smart agri businesses;
- Joint Aid Management (JAM – South Africa), which is improving food security in vulnerable Free State communities;
- Siyazisiza Trust, which gives aid to young Eastern Cape farmers;
- Social Change Assistance Trust (SCAT), which assists community food gardens in the Northern and Eastern Cape;
- Thanda, in KZN, which has been striving for better food security and farming success in rural KZN for over a decade.

Comment: Like Shoprite, this is an area in which Woolies has both expertise to provide and (with its shoppers) resources to share.

Another milestone for Woolworths on its Good Business Journey: the Dapper One has achieved its not-inconsiderable ambition of sourcing 100% of the cacao used in its chocolate products sustainably. These products include the whole shooting party: branded chocolate, breakfast cereals, hot drinks, yoghurts and milkshakes, biscuits, cakes and desserts, the works. How did it do that? It wasn’t easy: starting 10 years ago, and working with the UTZ programme, the Rainforest Alliance, Cocoa Horizons, and Fairtrade, it has verified that all of its cacao now comes from suppliers who adhere to environmentally sustainable cocoa agriculture and fair labour laws. These organisations, says Latiefa Behardien, Head of Foods Technology, Safety and the Good Business Journey, “transparently report on progress and impact, so our customers know that when they choose a branded Woolworths chocolate product, they are part of the global solution.”

Comment: For some Woolies customers, this commitment is important. But probably not for most customers. This is a business that in this area has decided to do the right thing for its own sake.

The new week brings a trading update from The Dapper One, and pretty illuminating it is – not just of the performance of the retailer itself, but also of the forces currently at play in this great sector we call home. That said, turnover was down -2.1% for the 26 weeks through December, impacted by extended lockdowns in Australia and civil unrest back home. Somewhat worryingly, Food – the edible star in the Woolies firmament – grew only +3.8%, although this accelerated slightly to +5.8% over the six weeks of the festive season. It was even outstripped in this instance by Fashion, Beauty and Home, which grew +4.2% over the period, although it did not enjoy the festive bump to the same extent as the rest of the business. The big story, however, was online sales, which grew by +22.4% (including Country Road and David Jones in Oz), contributing a now statistically significant 13.7% to total turnover. And its financial services book (that’s store credit to the rest of us) was up +5.3%, indicating a revival in consumer confidence and indeed buying power after its contraction of -7.8% last year.

Comment: Nothing may be taken for granted in our economy, a fact of which Woolies has always shown itself aware. So the full year numbers may tell a better story.

A big and, as it turns out, not uncontroversial step for Woolies, which has become the first major South African retailer to publish on its website a full and unabridged list of its Fashion, Beauty and Home products. “This is a significant step in our progress towards our Good Business Journey Vision 2025+ goals, and represents our commitment to a fully transparent, traceable and ethical supply chain across our operations,” explains Group Head of Sourcing Lawrence Pillay. Fair enough, but who’s on the list? It turns out the lion’s share of business goes to China, which houses most of the factories from which Woolies sources its impahla. Others are located in South Africa, India, Bangladesh, Mauritius, Pakistan, eSwatini and Madagascar – although no David Jones or Country Road merchandise comes from the motherland. Other significant goals include that all private label fashion and home products be designed to be reused, repaired, re-purposed or recycled by 2025, that energy usage comes from renewable sources by 2030, and that net zero carbon emissions be achieved by 2040.

Comment: A bold move, which paints a less flattering picture of Woolies’ procurement practices than it undoubtedly will in say three or four years.

A trading update from Woolies this week, and it’s not the picture of ebullience and bonhomie we’d like to see, with turnover, they say, declining -4.5% for the 20 weeks through the middle of November. Sales here in the Beloved Country were not too bad, considering: the Food business grew turnover +3.2%, and in a significant switcheroo, Fashion, Beauty and Home grew sales +7.4%. Speaking of roos, sales Down Under disappointed, dropping by -17% at David Jones and -5.9% at Country Road as the Australian and New Zealand governments imposed lockdowns that impacted the bricks and mortar stores which make up 70% of turnover in those benighted regions. Back home again, and online sales grew by +26.4% over the 20 weeks in question, as the same-day Woolies Dash delivery service kicked into gear. The Dapper One does warn, however, that it is not entirely sanguine about prospects for the festive season, which, it says, may be weighed down by such factors as low vaccination rates, the possibility of a COVID-19 fourth wave, and ongoing power outages.

Comment: Sobering stuff. But good news on the clothing front, and online is looking promising.

Sometimes Woolies’ Good Business Journey is an overarching strategy for a retailer that is sustainably run and engaged with the communities it serves. Sometimes it’s a literal journey, like the one from their fulfilment centre to your house in one of its new electric panel vans, which it’s currently trialling in partnership with DSV and Everlectric. The electricity for the vans is obtained from renewable and sustainable sources including rooftop Solar PV installations, and where this is unavailable, they offset 100% of the electricity emissions via renewable energy certificates. In two months, the vehicles have prevented the production of almost 3,600kg of carbon dioxide. Woolies is the first of our great retailers to go this route, if you will, and more will doubtless follow. Shoprite, related, has more than doubled its photovoltaic capacity this year and plans to power over 25% of its operations via the strong African sun over the next five years.

Comment: The capacity of South Africa businesses to innovate their way out of crisis is one of our greatest assets as a country. The sustainable electrification of our supply chains may prove a case in point.

The Dapper One is poised for a big play in omnichannel, advertising for over 100 specialists to advance its digital strategy, including product managers, UX and UI design experts, something rather thrillingly called scrum masters, and technical and design leads. Woolies has delivered a number of fresh innovations to the market in the last few months, including virtual try-ons for Beauty; WCellar which includes a stand-alone liquor store; an online hub and NFC-enabled shopping (that’s “tap and go” shopping for the rest of us); AI-driven recommendations, ratings and reviews; and Woolies Dash, the first on-demand retailer in the country with a full cold-chain. “Over the last three years, we have invested more than R1bn in our digital capabilities in South Africa, providing new and innovative experiences that meet evolving customer needs,” says Head of Online and Mobile, Liz Hillock.

Comment: Woolies has moved from a position of apparent complacency, after years in which it could do no wrong, into a leaner hungrier, more ambitious outfit altogether.

Woolies has decided to increase the remuneration of its store workers significantly over the next two years, investing R120m to bring its base pay up +23.5% from R33.40 an hour to R41.25 by 2023 – well above the current minimum wage of R21.69, and the minimum wage in the retail sector of R28.25. The move, says the business in its annual report, was driven by the belief that there is a “critical need to close the remuneration gap in the context of the socio-economic environment in South Africa”. It will benefit somewhere north of 20,000 store staff. As you know, Woolies has taken some flak in recent times on its executive remuneration policies. Subsequently shareholders voted against giving directors discretionary carte blanche in implementing the remuneration plan.

Comment: So, a move that goes some way to redress the ludicrous imbalance between executive and store-level pay. The gauntlet has been thrown. Who’s next?

Woolies’ catch-all fashion, beauty and home category has had a, perhaps understandably, bad rap over the past few how many years? Turnover in the category grew only +3.5% to R12.8bn in the year through June, and has not achieved much better over the last five years. Digging into those unpromising numbers, though, it seems that the woeful performance of apparel is the only reason for this: over the same period, home and beauty enjoyed barnstorming growth averaging +18%. “While turning around our fashion business is clearly critical to protecting our core, the growth in beauty and home provides us with the opportunity to expand more,” observes CEO Roy Bagattini. Accordingly, Woolies is focused on growing its beauty offering as a destination category, adding brands and extending the online reach inter alia; this alia includes the addition of professional skincare brand Dermologica to its online catalogue.

Comment: Mark our words, Woolies is back, at least on these shores, presenting lots of opportunities for savvy suppliers.

Them Woolies results this week, and not too shabby either (have a look at our summary here). Turnover was up +9.1% YOY for the 12 months through June to R78.8bn, (including concession sales: +9.7% to R85.9bn, with growth +5.9% in constant currency), and operating profit growing a positively barnstorming +44.5% to R6.9bn. Online sales grew +117.9%, contributing 2.3% to South African Food sales, which grew +7.4% here in South Africa, to R37.7bn while sales in Fashion, Beauty and Home grew just +3.5% to R12.9bn. Unsurprisingly, perhaps, Woolies has announced plans to reduce the floor space in this underperforming business by -11% of its 2019 area. “Sustaining the momentum of our Foods business is key to our success,” says CEO Roy Bagattini. “Critical to this is a deep understanding of our customer and our ability to deliver a world-class experience, underpinned by our commitment to quality and sustainability, but also to critical back-end capabilities.” In other Woolies news, South Africa CEO Zyda Rylands is taking early retirement from the position at the end of September, and with it the role she occupies, as part of the Group’s ongoing streamlining efforts. She has, however, agreed to defer her departure and will head Woolworths Food until she leaves in 2024.

Comment: A sad loss to our industry, which suffers an ongoing dearth of women in senior leadership positions.

Woolies has launched its next tranche of Good Business Journey sustainability goals, these ones focusing on traceability, transparency, circularity, diversity and inclusivity, and energy and carbon emissions. “We believe that setting ambitious sustainability goals, such as the ones we are announcing today, not only stretches and challenges our own business to do more but also inspires others to collaborate and join the cause for good,” says (relatively) new CEO Roy Bagattini. Launched in 2007, the GBJ focuses on improving nine key areas of the business: energy, water, waste, sustainable farming, ethical sourcing, transformation, social development, packaging and health and wellness, with over 200 targets supporting these areas. It has already significantly reduced the business’ environmental impact and increased its social and economic impact across the entire value chain, with a cumulative financial impact of almost R2bn in savings since its inception.

Comment: The GBJ has been a strategic and marketing triumph for Woolworths. The renewed emphasis on diversity and inclusivity goals could not be more timely.

A trading statement from the Dapper One covering the 52 weeks through June, during which period sales grew by +9.7% YoY, and by +5.9% in constant currency terms. The big performer was online food sales, which grew by +117.9%, contributing 2.3% to South African food sales, with fashion beauty and home sales growing +114.4% online, although in-store sales were generally muted in straitened economic times and as the business strove to streamline private label offerings and rationalise unproductive space. Down Under, David Jones and Country Road also grew online sales, although by significantly smaller rates. 11 Woolies stores were looted and severely damaged during the recent unrest, and while some damage was sustained at the Maxmead DC in KZN, it has resumed operations. The business warned that the events of two weeks ago and the already depressed retail environment will continue to impact the bottom line.

Comment: Good online numbers, although the base for growth remains low.

A very slow news week, we’re sorry to report, so here are a couple of items from Woolies that might otherwise have escaped our attention. First up: the Dapper One’s ill-fated Antipodean subsidiary, David Jones, lost only A$15m in the last financial, and not A$50m incorrectly reported elsewhere. This notwithstanding “it is the Group’s intention to stem these losses and bring the DJ Foods business to a breakeven position during FY22,” say Woolies. Back home in the Beloved C., and hot on the heels of the opening of its new stand-alone liquor concept launch, Woolworths is offering a new virtual WCellar experience. The WCellar Wine Club is a virtual community space for like-minded people and offers customers digital access to its expertly curated wine selection, exclusive discounts, event invitations, and monthly virtual tastings with winemakers and industry experts.

Comment: Let’s face it, a virtual wine tasting seems unlikely to replace the real thing. But Woolies is pushing hard to claim this space and opening a virtual front before anyone else does seems like a canny move.

Welcome to the WCellar concept store in Woolworths’ Bryanston Food Market store. Bask in the buttery light as it gleams off the rows of carefully curated bottles. Thrill to the bold industrial elements in juxtaposition with the mellow blonde wood panelling and shelving, and the soothing touches of artfully placed greenery. Here, in addition to a collection of fine selected South African and international wines, you’ll find local wine collabs exclusively bottled for Woolies, and a collation of beers, craft beers, ciders and spirits approved by the Dapper One, and an in-house sommelier will help you with optimal pairings for the meals you will no doubt make from ingredients selected carefully in the adjoining Food store. The launch has drawn approval of pundits, who see it as further evidence that Woolies is definitively on the comeback trail after its drubbing Down Under, as well as a timely complement to the retailer’s already exceptional food offering.

Comment: If this is what new boy Roy Bagattini is doing with alimentation together with Zylands and her team, we can’t wait to see what happens when he really gets going on apparel.

Two innovations from The Dapper One as it continues its recovery from the Australian side hustle that has distracted this otherwise iconic business these few years past. The ‘Virtual Try On’ service gives customers the opportunity to try on hundreds of shades of lipsticks, eye shadows and mascaras through an augmented reality platform. ‘Virtual Consultations’, developed in partnership with Clarins and Estée Lauder, give shoppers at-home access to one-on-one, digital-based consultations with beauty specialists who offer personalised skincare advice, product recommendations and application techniques. As you already have discerned, these developments speak to the recent ascendance of beauty at Woolies, which now stocks key global brands like Chanel, Clinique, Tom Ford and Smashbox, as well as its own, WBeauty – and also to the rise of online retail.

Comment: As goes Food, so goes Beauty. If Woolies get clothing right, that’s the whole shooting match right there.

Even as Woolies works to redefine itself as a business to repair the fallout of the Australian adventure and arrest the decline of clothing and general merchandise, The Dapper One is still delivering in the spaces it has long dominated: innovation in food, and the Good Business Journey. Regarding the former: witness the launch of a range of convenient do-it-yourself pickling condiments and salad dressings. Their pickling vinegars – available in Lightly Seasoned, Sweet and Sour, or Mediterranean – are a particular stroke of genius in a country where each one of our diverse cultures has a tradition of preserving edible items for posterity. Regarding the Good Business Journey, Woolies has rolled out another 52 plastic bag free stores, for a total of over 200 so far. They’ve also launched sustainable packing for their famed avocados, using a kraft box base made from 63% recycled paper and covered with a fully recyclable shrink wrap, delivering an annual plastic saving of 35 – 40 tons.

Comment: We have been fortunate enough to travel far and wide. And nowhere have we seen the coherence and innovation of the Woolies food offering, a gem in the crown of South African grocery retail.

Another slow news week in this great industry we call home, so we are here to tell you that Woolies dairy is the absolute bomb, and it has the awards to prove it. 96 of them, to be precise, which it picked up at the National Dairy Championship, where 900 products entered by 68 manufacturers, in more than 100 different classes, put up competition that was stiffer than Ayrshire’s double thick, whipped furiously for a minute and a half. 40 of these awards were first prizes. And two of the prizes were Qualité, out of just eight awarded. Are we done? No, dear reader, we are not. The Dapper One also took home the Grand Prize, nabbing the Product of the Year award for its 10-month mature gouda, for the third time, nogal. This, say the hosts Agri-Expo, who have been running the show since 1834, is a clear reflection of Woolworths’ ongoing dedication to offering consumers only the finest selection of quality dairy products, year after year.

Comment: And who can say fairer than that?

Interims from the Dapper One, and they’re not the set of numbers the punters were hoping for, although there were bright spots. While food sales once again shot the lights out, growing sales +12.1% year on (miserable) year, the Fashion, Beauty and Home business recorded a decline of -11.2% for the 26 weeks through December. In Australia, David Jones grew sales +5.3%, and Country Road +9.4%. Turnover was up +5.8% to R39.6bn overall, operating profit +16.5% to R3.8bn, and headline earnings +58.6% to R2.49bn for the period, although punters should not expect a dividend this half. Woolies has already scaled back its expansion plans for clothing, in both the size and the number of stores, with a target of reducing net space by -25% within five years.

Comment: It seems that Woolies has moved beyond denialism into the cool waters of acceptance, and now the healing can truly begin.

A trading statement from Woolies for the 26 weeks through December: Group sales were up +5.3% for the period, YoY, driven substantially by Woolies Food at +12%, which seems to indicate that the Dapper One’s new pricing strategy is paying off. You will recall that the business had committed to investing R1bn over the next couple years to keep prices steady on certain food items; this has proven popular in a time of economic uncertainty even for Woolies’ upmarket customer base. Online food sales grew dramatically, at a massive +158.5% for the period, but still contributes only 2.2% to sales. The click & collect offering has proven popular however, enabling us to rush some emergency bubbly and mince pies to the family over Christmas. It was not uniformly thus across the business however: Fashion, Beauty and Home declined -11.2%, as we await the Bagattini effect to kick in. Over in Aus, David Jones was down -8.8%, enough said, and Country Road Group -5.2%, negatively impacted by the lockdown in Victoria. Excluding that unhappy state, growth (including online) was +8.2%.

Comment: Woolies Food is the gift that keeps on giving, and it would be good to see the other divisions catch up.

Slow news week after the thrills of Black Friday, so first up: Woolies has let it be known via social media (see more here) that it will soon be launching a same-day “within the hour” delivery service, which will rejoice under the racy title of Woolies Dash, with the payoff “Fast. Fresh. Today”. And very cleverly, it has incorporated that little drawing pin icon from Google maps into their design. Pick n Pay and Checkers have both recently launched similar offerings, PnP through its acquisition of the Bottles business and Checkers with its Sixty60 app. Other news from Woolies CEO Roy Bagattini, is that the business will shortly be exploring more convenience formats and developing its own beauty brands. They are also apparently looking at what they might pick up from the sale, in pieces, of the late great Edcon empire. And all of this on top of the R1bn investment in prices over the next couple of years.

Comment: Stirrings and rumblings over at the Dapper One. It seems that a strategy is taking shape across the whole business – be good to see it all tied together sometime soon.

A trading update from The Dapper One, which reveals that for the first 20 weeks of the FY we have no choice but to call ’21, the business grew sales +3.5% YoY. And it would have been less if not for Woolworths Foods, which saw revenue increase +10.6%, or +9% on a like-store basis. This performance has prompted Woolies to allocate an extra +1.4% of net space to the food business, which we presume to be a generous allocation, and is aiming at upping this to +4% over the next three years, even as it reduces the footprint of its fashion, beauty and home departments by -1.5%. It is also looking at ways to increase the size of some of its small and medium-sized Food stores, now a pillar of the old portfolio. Over the next three years, the business will spend R750m of its R1bn allocation on price reduction in the food business

– no doubt resulting in its continued growth. In Australia, in the meantime, a return to the stage 4 lockdown has seen a decline of -11.7% in sales at the embattled David Jones acquisition.

Comment: Excellent to see Woolies polishing the jewel in the crown. Its food category is, we’ve always said, a world beater.

Having made their mark as a purveyor of fine comestibles to the upper crust, Woolies, acutely aware of the challenges of the moment, are investing heavily in value. They announced last week that over the next two to three years they would be investing R1bn in prices, R750m of it in the Foods business. An initial R250m will be invested in the remainder of this financial year, much of it in the fresh chicken range such as all whole and portion chicken packs, excluding Easy to Cook, crumbed and marinated chicken. “We have also applied more promotions on everyday basics across Groceries, Household and Personal Care to be more affordable to more customers,” says Woolies SA CEO Zyda Rylands. The investment, she says, is the culmination of a process of optimising efficiencies in the business and value chain and passing savings on to embattled punters. In other Woolies news, our old and talented friend, and ex-Mr P director, Paul Knoop, is now GM of Menswear, a clear signal that Woolies is serious about the Apparel business.

Comment: Good moves both, and at the right time.

Big up to Woolies whose personal care products have just received top honours in the Private Label Manufacturers Association’s (PLMA), 2020 International “Salute to Excellence” Awards. Under the earth-friendly category they received awards for their All-in-1 Baby Laundry Pods and their Cucumber & Jasmine Tea Dishwashing Liquid, and in personal care for their Eucalyptus & Mint Foot Mask, and Cuticle Oil. “This reaffirms that we are on the right path in our ongoing quest to offer market-leading products that are inspired by nature, better for our customers and better for the environment,” says Rahim Hoosen, Trading Head for Groceries, Household, Pets and Personal Care. Another Woolies award in the news this week is the R43m awarded to ex-CEO Iain Moir as part of his pay package for FY20. This includes his salary as acting CEO of David Jones, the Aussie acquisition he has been sent in to dig out of its hole, leave pay and notice pay.

Comment: Home and personal care might be categories on which Woolies should focus as they attempt to repeat their success in Food across the business.

We don’t generally have much truck with the garment industry, because that’s just not who we are. But the rag trade is hard to ignore in the case of Woolworths, where the fortunes of the grocery and food business are more inextricably bound up with apparel and homeware. And it seems that new guy, Roy Bagattini, is taking the turnaround of clothing seriously, where he believes the business has lost focus as it tries to be all things to everyone. “Instead of going sharp and focused and editing or amplifying, we go wide and thin,” he explains, “and as a consequence there’s a lot of inefficiencies and that’s had a big impact on margin performance.” He and new hire Manie Maritz, who is credited with the turnaround at Markham, are working closely on a strategy to fix fashion.

Comment: A Woolies where fashion is firing will be a business to watch.

Woolies released its annuals last Thursday, and they were about what you’d expect: turnover down by the thinnest silver of -0.1% to R78.3bn, with gross profit down -7.8% to R25.3bn, and HEPS – a better measure of profitability – down -45.7%. Fashion, Beauty and Home was down by exactly as much as Food was up: 10.7% – as neat a summation of what ails the business as we could have managed ourselves. Online sales of food was another bright spot, growing gangbusters at +57.2%. In Aus, sales at David Jones were down -6.4%, and after six months in which workwear for the better-heeled has seen a disastrous decline, down -14.3% at Country Road. New CEO Roy Bagattini has committed to no further bailouts for Aus, to the relief of shareholders. “The Group’s intention is to ensure that we not only endure the impacts of the pandemic but that we can learn from it and emerge both strategically and tactically stronger as a result,” says Signor B. For a closer look at it all, have a look at our summary here.

Comment: Woolworths Food is a truly remarkable brand, the anchor of the company’s future, and the truest expression of its Good Business vision. The rest? We’re not sure.

Woolies have issued a profit warning to shareholders, letting it be known that headline earnings per share (HEPS), an accurate measure of profitability, are likely to fall by as much as -70% for the year through June as COVID-19 hit non-food sales and the Australian operations struggle to find their footing. Back home, Food was up +8% for the year, while Fashion, Beauty and Home sales fell -10.9%. In Australia, sales at Country Road declined -50.4% for the months of March and April. Analyst Shane Watkins of All Weather Capital has a reputation of telling it like it is: “Investors really just want food and tolerate the balance of the portfolio,” he says. “The strategic imperative is to separate David Jones from the balance of the group [to avoid contagion risk] and then separate food from the rest of the operations.”

Comment: We’ve said it ourselves: Woolies Food is a world beater and giant killer. The rest? Do the numbers.

Time for a peek, if you will, under the bonnet of investments, particularly the sort which keep Woolies ticking along in these troubled times. Investment outfit Allan Gray let it be known this week that on behalf of its better-shod clients it has upped its stake in Woolies to 20%, or 7 billions of rands. What gives, Al? Woolies, after all, has lost over half of its value these five years past, due mainly to its misadventures in the blasted Antipodes, and is, furthermore, the custodian of a debt-hole worth R12bn – in the midst of a global pandemic, moreover. Duncan Artus, Allan Gray’s new chief investment officer, points to the excellence of the South African food business, and believes that its other divisions are on track for more of the same. He even has confidence that David Jones is on course for a turnaround, and that the hands of Roy Bagattini are capable and steady.

Comment: Not to mention that the share is very attractively priced right about now….

A trading update from Woolworths, and predictably it’s not the breezy affair we came to expect of the Dapper One back in the long-forgotten days of the consumer boom. But it’s not without its bright spots. So while overall sales declined -0.1% from last year, online sales of food grew a massive +87.8% in the second half, and fashion, beauty and home by +41.3%. The decline in sales was driven by the closure of all non-food stores at home under COVID-19, as well as the decline in foot traffic in the rest. In Australia, David Jones recorded a decline of -6.3% for the period, and Country Road -14.3%. Other news from AUS is that the Group has just successfully flogged its Bourke Street Menswear store for a no-doubt-welcome AU$121m. And as mentioned, a couple of silver linings globally. Sales ticked up to the tune of +4.7% in the last nine weeks of the period, after a -17.0% decline in the previous eight weeks.

Comment: The phenomenal success of online sales presages well for Woolies’ performance in omnichannel when normal trading returns.

At last, a Woolies story which does not necessitate a reference to Australia. Anyway, continuing its Good Business Journey, which has become quite the epic peregrination, or even odyssey, The Dapper One has announced further achievements in plastic reduction, in celebration of Plastic Free July. For starters, they are trailing three different types of paper packaging for online orders, which have typically needed extra plastic packaging to protect them in transit. They’ve also started a durability trial on their cardboard and recyclable shrink wrap packaging for their famous but fragile ‘ripe and ready’ avos. Finally, they’re shortly to begin rollout of their innovative Fashion Beauty & Home paper bags, which are approved by the Forest Stewardship Council (FSC). The Bags are locally made by a supplier development beneficiary and sourced from the same mill where Woolworths sends its recyclable cardboard and paper, adding a pleasing circularity to the process.

Comment: At a time like this, with everything on hold or in retrograde, it’s encouraging to know that progress is still both possible and prized.

The voices of analysts and other interested parties calling for Woolies to exit its David Jones experiment Down Under have now joined in chorus, as the business shows no sign of turning around and Woolies unleashes another wave of investment on the problem. They bought the chain for R21.5bn back in the year ’14, and have since written off around R12bn in value for an asset Ian Moir, dispatched to Australia to sort out the problem, now admits was overpriced. Woolies are now sending another almost R1bn to shore up the fortunes of the business, flagging as they are during COVID-19. This, says group head of strategy and investor relations Jeanine Womersley, is positively the last bit of assistance they will be getting. In better Woolies news here at home, Manie Maritz, ex of The Foschini Group, has joined the business as MD: Fashion, Beauty, Home as of yesterday, in a clear signal that the business is intent on fixing those underperforming categories for good.

Comment: Excellent news. About Manie Maritz, of course, not David Jones.

A trading update from The Dapper One, and like a home grocery delivery, lots to unpack. Then spray with disinfectant and wipe down. Sales, they reported, had fallen -17% in the eight weeks through April, with Fashion, Beauty and Home crashing to the tune of -61.4%. Down Under, meanwhile, not much better, with sales at David Jones and Country Road declining by -35.8%. New CEO Roy Bagattini? “We are committed to both businesses and are focused on executing our strategies to unlock and realise the potential in these businesses.” Although he did confirm that the business would be looking at reducing both store numbers and sizes to turn things around in Australia. On to better things, though, better things being food, in which Woolies have established themselves as a world beater. Food sales grew +17.4% in the eight weeks in question and have remained strong through May.

Comment: Woolies’ commitment to the Australian business – which was looking shaky before the pandemic and what is likely at best to be a deep global recession – defies logic and shakes the confidence of even the most enthusiastic analysts.

Interims from Woolies last week, with turnover up +3.8% to R40.9bn for the 26 weeks through December. Retail sales growth was just +1.2% though over the period, its weakest in a decade, and you kind of know what’s coming: adjusted profit before tax down was down -12.3% to R2.4bn, with HEPS, a perhaps more accurate measure of profitability, down -17.7%. As a result of all of this, the dividend has been cut in half, and the share price was down a touch over 4% on the news. Among the factors Woolies are blaming for the results are load shedding, a poor Black Friday performance, shakiness in clothing, particularly womenswear, and a generally iffy economy. Things they are not blaming include Food, up +8.1% with Food online sales up +22.3%. Have a look at our one-pager summary here.

Comment: It is fondly to be hoped that the arrival of Roy Baggatini sees the beginnings of a turnaround on the fashion side of the business.

A uniquely South African story from Woolworths this week, where an employee has allegedly been suspended for wearing a sacred goatskin wristband, or isiphandla, worn until it falls off after participation in an ancestral ceremony. The employee had received permission to wear one after an earlier ceremony, in 2018, and had worn one for months after a second ceremony last year. It was only when the employee was receiving bakery training in September last year that the trainer recommended that she be transferred to another department until the wristband fell off. She was asked to provide a written statement as to why she was wearing the band and whether she had received permission to do so, and it was then that she was suspended with immediate effect, and told that she was under investigation until further notice. Unfair labour practices are being mentioned, and the CCMA invoked. Hopefully the issue will be resolved before that stern Commission gets involved.

Comment: There are always two sides to a story, but jeez… Woolies do know how to get on the wrong side of the optics on a David vs Goliath dispute.

Ian Moir vacates the position of CEO at Woolworths on 16 Feb, the Dapper One releases its interims four days later. Timing that is not entirely coincidental, if you believe the more cynical of the analysts, who point to the shaky set of numbers Woolies is likely to present: while Food sales are up around +8% here in SA, according to their trading update, Beauty and Home grew just +0.9%, and Fashion +4%, for a Group sales haul of +3.8%. In Australia, it’s even worse, with a -0.4% decline in comparable sales at David Jones and +0.1% for Country Road. HEPS, a reliable measure of profitability, will decline somewhere between -15% and -20%, warn Woolies.

Comment: Fashion has long been a bugbear for the business, with pockets of excellence in a larger garment woven out of confusion and misalignment with the needs of the core shopper. The arrival of Roy Bagattini from Levi-Strauss may improve this – provided they keep doing food as well as they have these how many years and take to heart the lessons of the past difficult few months.

On the news last week of the resignation of Ian Moir as CEO of Woolies, the share price climbed a whopping 9.6%, reflecting the relief of punters who have had enough of the Dapper One’s Antipodean adventures, and their excitement about the new regime under Roy Bagattini, who has managed Levi Strauss’ largest operation, with stores in the US, Canada, Mexico, Brazil and Latin America, and played a major role in the development and acceleration of the e-commerce and omni-channel capabilities of that iconic brand. They might also be looking forward to shedding some of that dead Australian wood: while Mr Moir has been dispatched Down Under to turn David Jones around, the possibility is that new board chair Hubert Brody (not to mention new non-exec David Kneale) might take a more dispassionate look at the benefits of staying invested in that blasted territory. On the other hand, Mr Bagattini’s turnaround experience might suggest one last spin of the wheel.

Comment: In our current economic model, the share price is the only virtue. Despite his early successes with the business, Mr Moir has been measured against that, and found wanting.

Starting the new year off with a bang, Woolies have announced that embattled CEO Ian Moir will be stepping down in mid Feb, handing over the reins to Roy Baggatini, a South African who has just done a stint as President of Levi Strauss Americas. We still fondly recall the years when Moir could do no wrong, turning around Country Road in Aus, and then leading Woolworths on its Good Business Journey and entrenching the business as a beacon of innovation and efficiency. Then came David Jones. Woolworths Holdings chairperson Hubert Brody is excited about the new hire. “Roy has extensive operational, management and turnaround experience in global consumer and retail markets, which will prove invaluable as we continue to navigate the structural changes taking place in the retail sector and the challenges particular to our Group,” he says.

Comment: Cheers Mr Moir, and good luck in your next endeavour.

A 20-week update from Woolies, and like you we’ve been waiting for some good news from the Dapper One for how long now? And it’s not so bad, all things considered: while overall sales were up only +2.2% Group-wide for the period, Food came in at +8.8% up YoY and Fashion, Beauty and Home sales grew by +2.8% here in the Beloved Country. No surprise, then, to hear that David Jones, its benighted Antipodean acquisition, saw sales decline -2.1%, dragged thither by disruptions from the much-vaunted refurbishment of its Elizabeth Street store in Sydney. The business grew market share back home under tough conditions, and grew retail space by +3.6%. Online was a howling success, with sales up +68%, and its contribution to overall turnover now an impressive 10.4%.

Comment: Even at a time of burgeoning competition, Woolies has built itself a near-unassailable position in food for the posher punter. It’s even holding its own in clothing, beating the market averages. But Australia now…

Woolworths just walked straight into yet another PR brouhaha by selling a cheerful Country Road tote bag, designed in Australia, in this season’s hot colours: Azure Blue, Marshmallow, Orange, Baby Blue and Navy. Also known as orange, white and blue, or, the colours of the Old South African flag, deemed last month by the Equality Court to constitute “hate speech, harassment and an expression of white superiority.” Woolies, having had its attention drawn to the mistake by a Reddit user, pulled the bag off the shelves, and issued an apology, but not before a furore had erupted across social media. In other Woolies news, the Dapper One’s scruffier Aussie cousin David Jones has opened its first standalone gourmet food store in Melbourne's hipster haven, Chapel Street. It’s about a tenth the size of a decent super, and sells around 2,000 lines, 60% of them under the David Jones label.

Comment: Bad luck on the bag Woolies. An honest mistake, but one loaded with understandable anger.

Still on the sticky subject of director’s remuneration, Woolies execs have foregone their bonuses for three years running – except for CEO Zyda Rylands – who received a short-term incentive bonus to the value of R2.1m. The Woolies SA bonus pool was cut by -50% this year, and Country Road and David Jones by -50% and -65% respectively. Good news for the little guy is that store staff shared a bonus pool of R48m and supply chain staff one of R8m, leaving management to scrap over the R63m that remained. In other Woolies news, their VIP Club – for punters spending R2,500 and more each month in their stores – is looking for new ways to reward the high flyers for their service. Currently they’re getting a once-off discount of R75 for spending up to R350 and 10% off on their birthday. This year The Dapper One upped the ante, offering these shoppers 40% off on a limited number of Emirates flights, and are looking at adding lifestyle and fitness offers to the mix.

Comment: Shrewd move, to cement the loyalty of Woolies’ higher-spending base.

Sometimes the news is the news. This week, the news is that Woolies CEO, Ian Moir, is R191m some change to the good since the Dapper One bought Aussie money pit David Jones back in the ’14. After the acquisition, as you know, the value of the business has tanked to something south of 50% of what they paid for it, and Mr Moir has decamped to the Blighted Antipodes with a pack of Pratley’s and a spackle knife to see if he can patch things up. To be fair, though, while he picked up a handsome R23m in the last year, that was R7m less than the previous year, and he didn’t get a performance bonus. He’s also been pretty forthright about his failings vis-à-vis David Jones, while remaining upbeat: “I regret the price, and buying it at that time – hindsight is a wonderful thing,” he says. “But I think we have a great asset now.”

Comment: The optics might be dodgy, but this is pretty standard stuff. A PR blip rather than a scandal.

So Woolies is packing its erstwhile CEO Ian “The Professional” Moir off to finish the contretemps he started Down Under with the purchase of David Jones. Nah worries, mate, says Mr M. Put me on a plane, bob’s your uncle. There are those who argue that this is throwing good CEOs after bad money, but not Syd Vianello: “You can’t fix up a really, really tricky thing by remote control,” argues the legendary analyst. “Because he lives there and because he’s the guy who made the acquisition in the first place, it’s his job now to fix it up.” Other analysts also point to the solid shape in which the South African operation finds itself, and note the role that local CEO Zyda Rylands has played in its ongoing success. In other Woolies news, the Dapper One is trialling a natty line in 100% recycled paper bags, as part of their driver to eliminate plastics from their value chain where possible. A challenge with the new bags is that they take up seven times the space of plastics, and accommodations need to be made around this.

Comment: We still have an uneasy feeling about David Jones, but perhaps Mr Moir does know best.

So Woolies is packing its erstwhile CEO Ian “The Professional” Moir off to finish the contretemps he started Down Under with the purchase of David Jones. Nah worries, mate, says Mr M. Put me on a plane, bob’s your uncle. There are those who argue that this is throwing good CEOs after bad money, but not Syd Vianello: “You can’t fix up a really, really tricky thing by remote control,” argues the legendary analyst. “Because he lives there and because he’s the guy who made the acquisition in the first place, it’s his job now to fix it up.” Other analysts also point to the solid shape in which the South African operation finds itself, and note the role that local CEO Zyda Rylands has played in its ongoing success. In other Woolies news, the Dapper One is trialling a natty line in 100% recycled paper bags, as part of their driver to eliminate plastics from their value chain where possible. A challenge with the new bags is that they take up seven times the space of plastics, and accommodations need to be made around this.

Comment: We still have an uneasy feeling about David Jones, but perhaps Mr Moir does know best.

“Train smash” are not words which we of the business press bandy about lightly. But it is those words which our colleagues over at Fin 24 used to describe the state of Woolies’ Aussie operations, where David Jones is now worth half of what they paid for it. At the same time, business is ticking up back here in the heartland, where food sales grew +9% in the second half and total sales 7.7%. Online positively screamed through in Woolworths SA, growing by +28.7% but off a low base – it still accounts for only 1% of the total. Still: Australia, and a resulting decline on adjusted diluted HEPS for Woolies of 2.1%. They rather obligingly also reported on the comparable 52-week period, in which sales were more muted, growing +3.9% to R78.2bn with adjusted profit before tax down -3.7% to R4.6bn. For Ti’s summary of the results, click here. .

Comment: Australia notwithstanding, a picture of a business coming back to full strength. Nice one.

Two weeks ago, or longer, we said it. Then the analysts said it. Now we’re hearing it from the horse’s mouth, as it were: Woolies paid too much for flailing Aussie retailer David Jones, according to no less a personage that Ian “The Professional” Moir. Best to hear it from the man himself, we reckon: “The fact it’s now impaired to half the level we paid for it, of course that’s disappointing, but it doesn’t mean we don’t still have a great business we can really do something with – it takes a lot of money to create what we’ve got now and we’re future proofing it for the next five to 10 years,” he says. “We’re not trying to hold onto a business model that doesn’t work; we’re creating a business model that does.” This involves paying an absolute shedload of money for the refurb of the flagship store in Elizabeth Street, Sydney, which will now boast a food hall on the ground floor, closing underperforming stores, and refurbing a whole bunch of other top-tier outlets.

Comment: Well good they’re leading with food, anyway.

Some fairly good news from the Dapper One, whose erstwhile CEO Ian “The Professional” Moir announced last week that sales were up +5.9% for the year through June, or +5.1% if you exclude the movement of the Australian dollah. This, chorus the pundits, is evidence of a turnaround back home rather than Down Under, where sales grew only +1%, and further proof of the strength of Woolies’ legendary food division, which grew +9.8%. The same pundits are also admiring of Woolies’ performance relative to the rest of South Africa’s retailers: the sector as a whole grew just +1.7% in the three months to May. They remain rightly sceptical of the wisdom of further investments in David Jones, on which Woolies is springing over R2bn for the refurb of its 12-storey Sydney retail palace. “Do Australian consumers have that kind of money to do that kind of shopping?” asks the irrepressible Syd Vianello. “There are very wealthy people in Australia. But are there enough of them to support the kind of model that they’re working on?”

Comment: Fair question, Uncle Syd, and one we’ve asked in these pages often enough too.

Woolies thus far ill-fated Aussie venture David Jones has announced that it will be retrenching around 130 staff, 30 of them from head office, in an attempt to further cut costs as its struggles to find its feet post the $2.2bn acquisition of the business by the Dapper One in – can you believe it? – 2014. Since then, you’ll recall, the middle-of-the-road general dealer has been forced to write down $712.5m in value as a result – they say – of difficult economic conditions and unusually active competitors, particularly in the area of promotions. Pundits – of which even the blasted Antipodes have an unwelcome supply – say that conditions are unlikely to improve for anyone in the next 12 months.

Comment: David Jones is facing the same conditions as other Australian retailers, and easier conditions than Woolies itself does at home. Perhaps it is time for another, further-ranging write-off?

SPAR are partnering with FutureMe, a social enterprise that connects enthusiastic young people with progressive businesses to their mutual benefit. About 400 Grade 11 and 12s will spend a day connecting with employees from SPAR stores across the company, then 70 of them will be selected to attend the one-day boot camp. 30 to 40 of these will be selected to undertake the learning journeys into the SPAR world, and those that show real interest and aptitude for a career in SPAR will be further immersed in work experience opportunities. Pick n Pay, meanwhile, have launched their third annual Mandela Day Food Drive with the goal of collecting 500 tons of food or enough to produce two million meals. To reach this ambitious goal, the drive will run over a three-week period compared to one weekend previously. The food collected supports the 530 beneficiary organisations in FoodForward SA’s national distribution network, helping to meet immediate needs and also to help in stocking FoodForward SA’s warehouses with staple food reserves for months when supply is low. And in news of the not-so-nice, Woolies are being accused by a business that rejoices in the name of Sexy Socks, for bringing to market a set of socks with pictures of bicycles on them, something Sexy Socks had already apparently done, some years ago, because putting bicycles on socks requires a leap of genius that doesn’t come round more than once in the life of the average sock manufacturing business.

Comment: Nice work from two great nation builders. And open season once more on Woolies, discovering once again that truly there is nothing new under the sun, not even socks with bicycles on them.

SPAR are partnering with FutureMe, a social enterprise that connects enthusiastic young people with progressive businesses to their mutual benefit. About 400 Grade 11 and 12s will spend a day connecting with employees from SPAR stores across the company, then 70 of them will be selected to attend the one-day boot camp. 30 to 40 of these will be selected to undertake the learning journeys into the SPAR world, and those that show real interest and aptitude for a career in SPAR will be further immersed in work experience opportunities. Pick n Pay, meanwhile, have launched their third annual Mandela Day Food Drive with the goal of collecting 500 tons of food or enough to produce two million meals. To reach this ambitious goal, the drive will run over a three-week period compared to one weekend previously. The food collected supports the 530 beneficiary organisations in FoodForward SA’s national distribution network, helping to meet immediate needs and also to help in stocking FoodForward SA’s warehouses with staple food reserves for months when supply is low. And in news of the not-so-nice, Woolies are being accused by a business that rejoices in the name of Sexy Socks, for bringing to market a set of socks with pictures of bicycles on them, something Sexy Socks had already apparently done, some years ago, because putting bicycles on socks requires a leap of genius that doesn’t come round more than once in the life of the average sock manufacturing business.

Comment: Nice work from two great nation builders. And open season once more on Woolies, discovering once again that truly there is nothing new under the sun, not even socks with bicycles on them.

Big up to Woolies this week, which has announced its first intake of candidates from the Youth Employment Services (YES) programme, a government-led partnership with business, labour and civil society which aims to empower one million young South Africans by offering paid, quality work experience, and which will see the Dapper One recruiting 450 learners for work experience in 108 stores in South Africa and at their head office for a year. And to SPAR, inviting Kirkwood Wildlife festival-goers in the Eastern Cape to ‘Take a Walk on the Waste Side’ through a maze that illustrates the various alternative ways in which plastics may be used, as part of their project of reducing the use of single-use plastic. And newly-prominent independent group Kit Kat have donated over 700 blankets to local community members, hospitals and schools as the winter sets in.

Comment: Good things are all around us, if you know where to look.

How’s Woolies doing? Let’s go to the punters, who have been buying Woolworths’ shares at a rate which has seen their value head north to the tune of +11.5% since the end of May, to around R48.90. Far from the heady days of R100 and up in 2015, but still. “The bulk of the heavy lifting has now been done,” says an insider of the untidy David Jones acquisition daaahnundah, pointing to new systems and an online platform coming on-stream, improved sales, the restoration of its Sydney flagship and the relocation of head office to the great Australian city of Melbin. But it’s not all on the Aussies: the retail index back home in the Beloved Country rose around 9% over the same period, and the all-share 7.6%, which indicates a surprising bullishness in the market and even the glimmerings of a retail recovery. In other Woolies news, they’ve won two prestigious awards – the best Sustainable Display at the annual Creative Retail Awards in London for their striking Christmas 2018 window displays and the Best Use of Social Media at the Content Council’s Pearl Impact Award.

Comment: A good week for Woolies, then, and hopefully the first of many.

Hey this is worth a try: let’s get some real class on the board! Woolies have appointed as an independent non-executive director, Christopher Colfer, onetime CEO of Richemont’s Alfred Dunhill business. Colfer brings decades of experience in retail, cosmetics, skincare, clothing and e-commerce to the role. He is an Australian resident, who will also serve on the board of Country Road, and slum it with the worthies of David Jones to boot. In other – sadder – Woolies news, the business mourns this week the passing of Tom McLoughlin, who as packaging manager of Woolies got interested in a more sustainable approach to the food business, and went on to become one of the pioneers of the Good Business Journey, which itself has been massively influential in the greening of South African retail.

Comment: No one ever lives to measure the height of the tree they planted. But we honour them for planting it.

David Jones has a creative agency called Maud, and that’s pretty much all you need to know about that. Perhaps one day it will make an honest branding agency out of Maud, and we will call it Maud Jones. Anyway, we digress. Slightly. Bottom line is, just like any business in trouble, David Jones are playing blame the agency, and are reviewing their Aus$25m media account, currently run by Carat, with whom relations have apparently broken down irreparably. But not so irreparably that they aren’t going to make a go of it until Christmas. Maud came on board late last year, as did the retailer’s content agency (online stuff), Medium Rare, which as we understand it, is an expression meaning half-cooked. They also took a chunk of their “creative capabilities” in house, which also generally means the house is on fire.

Comment: Oi Woolies. Mate. Do yourself a favour. Get out while the going’s still OK-ish.

No slur intended on the fine men and women of the Platteland, but a recent study by the University of New England into the psychological profiles of South African beef farmers shows that they share some of the characteristics of their Australian counterparts. Apart from a general preference for short khaki pants, and one supposes a broad tolerance of horned ungulates, 15% of them are risk averse, 15% are not, and the remainder are persuadable. Why in heck should any of this matter? Under the High Value Beef Project, Woolies is trying to get about 350 small farmers from six South African provinces involved in producing really good meat, for which they will be paid a handsome premium. To bring these farmers into a specification-driven production system, cultural programs are required to help them change their behaviour; hence the study.

Comment: Fascinating stuff. Go forth, you sons and daughters of the soil, and produce high quality beef, for we would eat of it!

Present at the launch of the In2Food’s new Bonaero 22,700m² ultra-fresh food production facility was Zyda Rylands, CEO of Woolworths South Africa. To which news you will no doubt respond, in quick succession, “Where?”, “What?” and then of course “Why?” In2Food is Woolworths’ biggest supplier of fresh and prepared food, disposing of the first and third of your questions. And as to the “what”, the plant will churn out some 2,000 litres of soup and 10,000 pancakes an hour, then shipping these at a furious pace out of nearby OR Tambo, to Woolieses all over the country, in fulfilment of Woolies’ ambition to expand its ready-to-eat offering.

Comment: We have said it before: Woolies is a world-beater in food, and it is here that it seems, sensibly, to be focusing for local growth, while it sorts out the clothing story.

Zyda Rylands, MD of Woolworths South Africa, doesn’t say much, but when she does, it’s worth listening. Like this:On the 26-week decline in clothing sales: “Dresses were too short, there was too much skin showing; so the older, modern customer: we completely alienated her.”On store openings: “We have slowed down our store openings in fashion. There will be more growth in food. We’d look to do smaller stores as and when it’s appropriate.”On Food: “We’ve … had to change how we see food and drive a good value proposition for customers, together with the fantastic innovation we have.”On her job: “My job is to make sure that SA delivers. And that even in the most difficult circumstances we will always do the right thing.”

Comment: She has a clear idea of what’s wrong with the South African business, and what’s right. It is to be hoped she can guide it back into more profitable territory.

Some good news from Woolies this week that nevertheless has nothing to do with an increase in the bottom line: the viral water video, while showcasing the miraculous ability of South Africans to laugh at ourselves and – yes – even at each other, did zip for their water sales. Nada and niks. But Woolies did contract the wags involved - Qhama Sinkila, Gomolemo Nkwana, Banele Moss and Itumeleng Moboko – to dish out water at a water event at the Mall of Africa last Friday, under their LoveH2O fund, all decked out in water-saving RE: jeans. In other news of the stuff that gives us life, P&G is once again partnering with Massmart in the former’s ongoing Children’s Safe Drinking Water (CSDW) campaign. For every purchase of a P&G product from a Massmart store, P&G will provide the equivalent of a day’s clean drinking water to a family in need, through the distribution of P&G Purifier of Water sachets.

Comment: Dire times for the planet. But never has there been so much energy and creativity aimed at the challenges which affect us all.

A little more on the  really important people who joined the Woolworths family last week, and no, we’re not talking about the water guys, although Woolies must be relieved that something went unexpectedly right for them on social media for a change. We are, of course, referring to Mr Kneale and Mrs Skweyiya, brought in to shore up the board and help with the difficult decisions the Dapper One will need to make in the next couple years. Mr Kneale, in addition to his general retail experience, brings expertise in the beauty and cosmetics trade, an area in which Woolies seeks to grow, bringing in a wider range of global cosmetic brands and beginning to offer something known as a “cosmeceutical" experience instore. Beauty experienced strong growth at Clicks during Kneale’s tenure there. On the downside, say some analysts, what the board really needs now is more members with experience in the thorny and arid wastelands of Australian retail.

Comment: Although you don’t necessarily have to choose, do you?

Well here’s a turn up for the jolly old books, and no mistake! Fresh – if that‘s the word – from a decade of success at Clicks comes Mr Kneale himself, to take his place as a non-exec on the Woolies board. Although just between you and us, they might like to offer him something a little more, shall we say, active at this difficult point in that great company’s history. He is joined by fellow newbie Thembisa Skweyiya, herself no slouch, coming as she does via Citigroup, Nedbank Capital, and the board of Rothschild (SA).

Comment:

Those Woolworths interims then, served to us just yesterday. Turnover growth up +1.9%, although this was below the growth of +2.5% reported in the same period last year, partly perhaps, because it takes into account one day less of pre-Christmas trade compared to 2017. Food was once again the star performer at +6.3% turnover growth, while Fashion, Beauty & Home showed just how up against it it really is with sales -2%. And then there’s David Jones, lumbering its way through structural and management changes, and an Australian consumer who just well… isn’t buying it. But for more of those snappy numbers that you all love, have a look at our summary here.

Comment: The challenges have seemingly been identified, and stratagems put in place to address them. The next six months will be telling for the Woolworths business.

David Jones, the troubled Aussie retailer Woolies bought back in 2014, has just been through its third CEO since the acquisition, with the resignation of David Thomas for personal reasons. He replaced the axed John Dixon, who in turn took over from Ian Nairn (the Aussies knew him as “Een Neen”), resigned. Dixon, you may recall, was given the chop just a month before the sacking of MD for clothing and general merchandise, David Collins. It’s all sounding a bit like the wives of Henry VIII to be honest. Thomas will be replaced temporarily, by Mr Moir himself, until they can find another bloke named David to take over the increasingly slippery reins. After Thomas bailed, two non-execs resigned from the Woolies board, viz. Gail “Davy” Kelly and Patrick “The Davemeister” Allaway.

Comment: Time, perhaps, for Woolies to contemplate the fallacy of sunk costs, and consider cutting that blighted continent loose.

OK Woolies, let’s keep it tidy for a while now. Forget the edgy Valentine’s Day promos and the dicey product innovation practices, and stick to the knitting: providing exceptional quality and convenience in food for South Africans who appreciate that sort of thing. In fairness, though, there is a burgeoning demographic which will take delight in anything the Dapper One does that smacks of, well anything, really.

Comment:

So the Deloitte’s (grandiosely titled) ‘Global Powers of Retail’ 2019 report is out, and good news for Shoprite, in a bittersweet way, is that with the collapse of Steinhoff into scandal and penury, the Big Red One was our globalest power of retailness back in FY2017, in a solid 86th place. SPAR made it into 140th place, with Pick n Pay in third at 160th and Woolies at 179th. Number one was Walmart, with turnover of half a trillion dollars, followed by club-discounter Costco at $160bn. While our retailers are relatively small globally, Africa looks promising, second only to Latin America in regional growth in that FY. And retail itself seems a good space in which to operate: the top 250 cumulatively grew revenue +83% over FY2017, for total global value of $4.5trillion.

Comment: A bit of perspective there. SA retail is relatively small, globally, but has lots of potential, while in terms of shopper in-store experience and ranges on offer – it can be argued – sits alongside those at the top of the log.

This just in… David Thomas, CEO of similarly-named Woolies subsidiary, David Jones, has resigned for personal reasons. A replacement CEO will be announced in due course, with Group CEO, Ian Moir, working directly with the DJ management team in the interim.

Comment:

Still a little cynical about the power of social media, are you? Let’s take a gander at some number then. Did you know, for example, that of the 19,482 social media posts about Woolies, from 1 to 14 January, 46.5% were about the Ubuntu Baba story? That 14% of authors drew attention to the fact that Woolies had been involved in similar goings-on before? That 170 self-identified mums were responsible for a disproportionate 3.6% of the total conversation volume, and that 80% of what they had to say was negative? That net negative sentiment reached a nadir of around -65% on or about the 9th of Jan, but that it has ticked steadily upward to neutral? All of this from the helpful researchers over at Brandseye.

Comment: Did we learn anything from this people? It is fondly to be hoped we did.

A trading update from the Dapper One, which reported that sales for the 26 weeks through December 23 grew +1.9% compared with +2.5% for the same period plus one trading day last year. What gives? Food sales were respectable, at +6.3%, while Fashion, Beauty and Home declined by a now all too familiar -2% – unhelped, apparently, by the introduction of David Jones products onto local racks. In Australia, David Jones itself grew +1%, which is unlikely to cover the costs of its R21bn acquisition in a hurry, and Country Road +2.3%. The comparative success in Food was driven by lower inflation, plus the Group’s investments in promotions and pricing.

Comment: We have said it before: Woolies is a world beater when it comes to food. But in a crowded market that now contains international players like H&M and Zara, it needs to up its fashion game, or stick to what it does brilliantly.

An inauspicious start to the year for Woolworths, which has fought another one of its ill-advised Goliath vs David battles with a smaller business and lost. Last time around, it was old-timey soft drinks; this time, upping their game, they’ve gone up against an SMME that locally produces and sells organic hemp baby carriers. Sometimes, we’re inclined to give retailers the benefit of the doubt. There are, after all, many products out there, and many of them are unavoidably similar. But in this instance, it was shown that someone in Woolies head office had ordered and received two Ubuntu Baba carriers months prior to the Dapper One bringing its strikingly similar product to market, at a fraction of the price, made from polyester and manufactured in China. To add insult to injury, they’d plundered Ubuntu Baba’s product descriptor for Google AdWords, to bump up the Woolies product in the search. Woolies have withdrawn the product from stores and online, and offered a refund to any purchasers who would like to return the offending carrier.

Comment: Just, no. This is not how we build a brand, a business or an economy.

Woolworths can’t promise they won’t (They’re definitely going to – Ed) take a further write-off on their investment in troubled, or even embattled, Aussie retailer David Jones, after the R7bn bath they took on the investment in early ’18. That write off will boost future returns, as it will be based on a lower capital cost; any future impairments will be based on whether the new David Jones business plan works out or not. In much, much better news from the Dapper One, Woolies pies have become the first food products in South Africa to be certified by the Roundtable on Sustainable Palm Oil (RSPO), in their commitment under the Good Business Journey to source only certified sustainable palm oil for their branded products by 2020.

Comment: Woolies is in the trenches somewhat, at the moment. But they’re continuing to do the right thing, even when they’re not doing particularly well. That’s a business.

A trading update from the Dapper One, and while such events might not be regarded with the same sense of pleasurable anticipation as they once were by punters, not bad, all things considered. Overall sales were up +2.7% for the 20 weeks through mid-November, with Food sales storming through at +7.2%, but Fashion, Beauty, and Home shrinking by -3.3%. Woolies attribute the growth in Food to the success of their promotions for the period, and to the fact that they’ve managed to hold pricing down to +1% in a difficult economic ambit for shoppers. While +1% is still a notch above where the competitors are, with both Shoprite and Pick n Pay holding it down to around 0.3% for a not-entirely-comparable period, it seems that the business still has the pricing/quality equation right in Food at least. Woolies Food delivered stronger like-for-like sales and volume growth than last reported by their peers.

Comment: Some hard fixes for Woolies: bring Australia back into positive territory, and work the Food magic on Fashion, Beauty and Home.

Sending them back where they belong this week is Woolworths, which has decided to drop the David Jones brand from its clothing ranges, rebranding the noxious Aussie gear under the existing Classic Collection range. Australia has been a blessing and a curse for the Dapper One, which enjoyed success both here and there with Country Road, but which is struggling to recoup its R20bn in the David Jones department store. Woolies has had to write the investment down to the tune of around R7.5bn, but is not giving up, even as Mr Moir speaks in muted tones about the search having started for his replacement. The David Jones turnaround has involved adding food to retail in existing stores, and investing around A$200m in its flagship Sydney store.

Comment: Australia, eh. Where the hopes of South Africa’s retail finest go to be cruelly dashed. To be honest, we have a feeling it’s not you, it’s them.

14 million South Africans are at risk of going hungry every day, while one-third of all the food produced here ends up in a landfill. This is the sort of equation which characterises our current global economic model, and which initiatives like World Food Day are designed to highlight, if not address. To mark the event this year, Woolies have launched their One Small Spoon campaign, by which the business is bringing all of its food security programmes together under one banner to maximise their impact.

Comment:

The Dapper One has got itself into a spot of bother, on World Environment Health Day no less, as its organic produce has been tested for some of its claims and come up wanting. ‘Testing of Products Initiated by Consumers’, a mouthful which somehow resolves itself into the acronym Topic SA, has tested the veracity of the claims on the packaging of Woolies organic baby spinach and sweet potatoes, through lab tests and farm and factory visits, and found conventional pesticide residue on the former. It also established the organic certification had expired, at which point, after some to-ing and fro-ing, Woolies tested its own spinach and then ceased production, dissatisfied by what it had found.

Comment: As the demand for and competitiveness of organic and ‘wellness’ products escalates, it is good and right that manufacturers and retailers alike be called out for potential irregularities. Just how these are then addressed will become the telling factor.

Online shopping, as the tech-savvy millennialists among you know, is expected to grow at a whacking +19% this year and to hit R18bn worth of sales on local websites. Sensing a good thing, Woolies have developed an application – an “app” if you will – that allows the time-pressed shopper to order groceries– or indeed clothing, bubble bath or even a nice, fluffy towel – directly from his/her mobile phone – although online groceries are still low in terms of profitability. Woolies report that over 60% of traffic to their site comes from mobile phones, and that there has been a +64% increase in mobile transactions over the last year. All of which explains why the Dapper One has just launched the “most comprehensive retail app in the country” (their words), on which punters can check their loyalty points, view and manage their financial products, check stock at their local store, manage their shopping lists, actually buy stuff, and of course “get daily inspiration for food and fashion.”

Comment: Inspiring stuff indeed.

Woolworths have a seemingly effortless genius for food retail (mounting competition notwithstanding), which makes their current struggles in clothing and, Down Under, department-store retailing, all the more puzzling. Their travails with Aussie retailer David Jones are well-documented, here and elsewhere, but they are doubling down on their investment – which has already cost shareholders A$712m – by investing another A$124m in the business. The relaunch of their refurbished flagship store in Sydney next year is going to be a test of whether this investment is justified. Back home, in the meantime, food took over from clothing as top performer, with turnover in food rising +9.6% from last year, as the operating profit in clothing dropped -21.3%. Of more concern, of course, is profitability – Woolies recorded a loss of R3.6bn this year, in contrast with a profit of R5.5bn last year. Still, Mr Susman is sanguine. “If in two years' time we are having the same conversation, well, we'd better be rethinking it, but I'm quite confident that we will not be in the same situation," he says.

Comment: Ditch David Jones is our advice, then stick to the knitting and take the food model global.

On to Woolies then, whose 52 weeks ended 24 June 2018 resulted in +1.6% growth in turnover and concession sales, with adjusted pre-tax profit slumping -13.8%, results that they themselves describe at “disappointing”. How so? Anyone? Anyone? Challenging trading conditions of course, both in SA and Down Under, although CEO Ian Moir was quick to point out that the mistakes made in clothing could not be ignored. On the upside, Food continued to be the key weapon in the WW arsenal, outperforming the market, with sales growth +8.4% and comparable store sales +4.8%, a result attributed to “the continued delivery of quality, innovative product at an attractive price point.”  The other divisions were a mixed bag, with turnover in WW Fashion, Beauty and Home down -1.5%, Financial Services growing +3.8%, David Jones’ full year sales -0.9% (on the back of an uplift in H2 which is hoped will continue into FY2019) and Country Road with sales up +1.7%.

Comment: Let’s leave the final word to the boss himself – “No doubt that the economic challenges and the structural changes that are sweeping through retail continue to challenge us. It has been a turbulent year. A story of ups and down. We have gone from Ramaphoria to Rama-reality”.

When it comes to doing the right thing by dear old Planet Earth, the spirit is willing but the flesh is sitting under a palm tree somewhere, sipping Pina Coladas from a polystyrene cup, and I’ll take mine with a straw. Enter Woolies, who have come up with an idea that will actually help punters recycle the endless packaging our great industry cannot help but generate. It’s a reverse vending machine that identifies the recyclability of your waste by barcode, then allows you to deposit the offending item depending on this indicator. You, the virtuous consumer, then receive a congratulatory SMS with a confirmation of your deposit as it were, and once the machine is full, a local recycler is contacted to come and take it away.

Comment: This is an excellent innovation, although the reduction of wasted packaging would perhaps be an important first step.

The ongoing performance of Woolworths was something we ourselves once came dangerously close to taking for granted. But now this: the Dapper One has let it be known that profits for the year through June would likely come in at -20% under last year’s haul, on poor trading conditions back home and the ongoing woes of their Antipodean venture with David Jones. Fashion, beauty and home sales for the year will come in at -1.5% down on last year, while food grew at a way above market rate of +8.4%, with like store sales growing an inflation-matching +4.8%, and net retail space for food up +3.5%.

Comment: Woolworths continues to deliver innovation and excellence in food, where it is more than capable of competing globally, and this shows in the results. Perhaps this is where it should focus the main part of its efforts going forward.

Providing an intriguing glimpse into the global food supply chain this week, Woolies is withdrawing a range of frozen rice products (Frozen rice – you sure of this? Ed.) on concerns of listeriosis. The rice, you see, is mixed in with sweetcorn procured from the Greenyard factory in – any guesses? – Hungary, which has been implicated in a listeriosis outbreak in Europe. While Woolies itself has found no proof of the bacterium in the product, better safe than sorry, as sick punters in Austria, Denmark, Finland, Sweden and the UK could tell you. In more uplifting Woolies news, the Dapper One is partnering with UNICEF in assisting in a nutrition pilot which seeks to feed around 50,000 pupils over the next three years in 50 disadvantaged primary schools in Gauteng that participate in the National School Nutrition Programme (NSNP). The initiative aims to improve the capacity of about 100 volunteer food handlers, who are local community members, to prepare balanced school meals for children under safe and hygienic conditions. Woolies has committed R4m over the next three years to the project.

Comment: Can’t we just use our own mealies? Just a thought.

In further confirmation that Australia is a blasted wasteland where South African retailers go to scourge themselves of their sins and emerge pink and blinking into the light of a new day, Woolies is getting rid of 16 head office staff over at troubled retailer David Jones, in order to staunch the bleeding and enhance its competitiveness. Woolies bought David Jones for around R21billion four years ago, and the consensus is that this was roughly R7billion too much.

Comment:

Both Woolies and Pick n Pay have taken small but significant steps down the long, uncertain road which may lead us to a more sustainable future, with the announcement by the former that they will be phasing out single-use shopping bags by 2020, and by the latter that they will start introducing 100% recyclable bags. Woolies have a vision for a value chain of “zero packaging waste to landfill”. This as we learn that only 10% of all plastic ever made has been recycled. SPAR in the Eastern Cape, and various other SPARs around the country are either in the process of, or have already switched, plastic bags for paper, and Pick n Pay’s green range features all-recyclable packaging.

Comment: These are nice initiatives. But frankly, they represent a drop in the ocean, which as you know is currently being choked by plastic. Even better would be if the government banned all single use plastics by 2022, as the government of India has announced it will do.

A bit of a dust up between Woolworths and SACCAWU over the issue of the flexitime conversion the retailer implemented in 2012. Woolies, you may recall, retrenched 44 workers who didn’t accept the terms of the conversion, SACCAWU appealed to the Labour Court to the effect that the retrenchments were unfair, the Labour Court found in favour of the workers and ordered reinstatement. Woolies took the case to the Labour Court of Appeal, who found that the dismissals were indeed unfair, but that as their positions no longer existed, reinstatement was not a realistic option, a finding to which the union objected and has duly taken to the Constitutional Court. The eminences of that august chamber have reserved their judgement, while Woolworths is seeking leave to appeal to the Labour Court.

Comment: The casualisation of the labour market is a thorny issue for all our retailers – and thornier still for their staff.

Back in the more innocent, hopeful days of ’11, Woolies launched its Farming for the Future programme, with 14 members and a view to eventually source all its key commodities in a sustainable manner. Participating farmers – of whom there are now an impressive 196 – are evaluated every year according to sustainability criteria which include soil management‚ water use‚ biodiversity‚ waste disposal‚ pest management‚ carbon footprint and adherence to environmental laws. The happy by-product of all of this, of course, is food that is tastier and healthier to eat.

Comment:

Four months ago, Woolworths wrote down the value of its ill-considered Antipodean acquisition John Dixon by nearly R7bn. Last week, it unceremoniously dumped David Jones, CEO of its Australian operation, in order to “cut costs”. Oops sorry. We got two Australian names mixed up there, common mistake. David Jones is of course the retailer, John Dixon the unceremonious dumpee. Be that as it may, Woolies is committed to going the course with DJ, which it bought for R20bn in 2014. This has analysts concerned, believing as they do that the David Jones department store model is long past its sell-by. They’re also concerned that the premium-food business as practiced so successfully in SA could struggle to find traction – and even willing suppliers – in a land where, we are reliably informed, “women glow and men plunder.”

Comment: On the first issue, we may agree cautiously with the pundits. But having travelled long and far, we believe that the Woolies food model, with its focus on customer experience and quality, is ripe for global expansion.

In a textbook example of the fallacy of the sunk cost, or the steady rectification of a strategic miscalculation (ask us again this time next year) Woolies are investing in the turnaround of their overpriced and underperforming Antipodean asset, the department store which rejoices in the sturdy Aussie name of David Jones. DJ, says Woolies, is in a transitional phase which requires investment, and this has seen Group CAPEX jump from R2.59bn in 2017 to R3.8bn in 2018, with another chunk slated for 2019. This money is going, substantially, into the refurb of a flagship store in Sydney, providing consumers with that ‘experience’ they’re demanding more of these days, and in funding the retailer’s big push into food – the latter is set to cost A$100m over three years – although they’ve also thrown a couple bob at new merchandise and finance systems. On the food front, they’re trialling three formats in a picky, picky market.

Comment: Is it going to work? Too early to tell, although we suspect the food offering is the hill on which David Jones will stand or fall.

Comment: OK Woolies, here’s our thinking: don’t buy another Aussie retailer, and next time, take of the d#mn sticker – those are two hills not worth dying on.

There was a time when Woolies results were something to be looked forward to with mild but pleasurable anticipation, like birthdays after a certain age, or Father’s Day. With the troubles down under, this is not currently the case. For the 26 weeks through to 24 December, The Dapper One grew turnover just +2.5% to R38.8bn year on year, with adjusted profit before tax falling by -8.8% to R3bn. At issue was the well-documented difficulty of getting the overpriced David Jones acquisition to start paying for itself pronto, and challenges with clothing back home, particularly in womenswear. Plans are underfoot to fix both. On the upside, food grew +9.4% with comparable sales up +5.3%. Woolies believe that trading will continue tough for the next six months then should tick upwards as the Cyril effect kicks in. And if you want to know a bit more, click here for Trade Intelligence’s at-a-glance view of it all.

Comment: No one does food for the well-heeled punter better than Woolies, although the likes of Checkers and PnP are nipping at their heels. But the Group’s clothing offering is a little in disarray at the moment in highly contested territory. One wonders if a growing focus on the former is not the way to go.

More on the David Jones turnaround in Aus that, we hope, is sure to come: Woolies have let it be known that South Yarra, a Melbourne suburb, will soon be home to David Jones’ first standalone store, which promises to offer “a premium retail food offering with an emphasis on convenience and quality to suit the discerning local customer”. Except that they’re punting it as “a praymium raytail fode orffereeng? Weeth an emphasees on convayniance? etc”. In keeping with how we do it back home, most of the retailer’s stock, including 90% of its fresh offering, will be marketed under David Jones’ private label brand. This on the heels of the opening of the flagship Food Hall in the Bondi Junction store in Sydney, and ahead of the opening of several more standalone food stores this year.

Comment: The Woolies food model as developed in SA is about as sophisticated and relevant retail experience as we’ve seen anywhere. We truly hope it gains the traction it deserves in Australia and beyond.

The outback, we are told, is littered with the skeletons of foreign businesses who thought it might be a good idea to make a couple of clams (Aus.) off the local punter. Is Woolies about to join them? Too early to tell, perhaps, although last week’s news tells of how Mr Moir paid as much as 33% too much for the drably named local retailer David Jones, whose losses continue unchecked in the face of tough trading conditions down under. Woolies announced a R7bn impairment due to, they said, “the cyclical downturn and structural changes” in Australia's retail sector. While Mr Susman has expressed his full confidence in the leadership of Ian Moir, he has also declined to say how long he thinks the turnaround of the Aussie outfit will take. In the meantime, Nic Criticos – the store design maven responsible for the glory that is Woolies locally, is reportedly headed to the blasted Antipodes for a two-year stint, presumably to spend some of the A$207m CAPEX earmarked for David Jones for the 2018 FY.

Comment: Safe to say that there’s some sort of turnaround strategy in the offing. Let’s hope for Woolies’ sake it works out.

Alarming news from the Dapper One, which announced this week that it expected half-year profits to decline by up to 17.5%, driven thither by our shaky economy and ongoing political uncertainty, and by competition from new entrants H&M and Amazon down under. Woolies also let it be known that sales had grown just +2.5% for the period through December. Breaking this down, on the home front and relevant to our grocery retail readers, SA food sales remained the strongest performer, up +9.4%, while beauty and home declined -0.2%. Food retail space grew +6.8% year-on-year. In other, more positive Woolies news, the business has received kudos from researchers from Stanford for its ‘Farming for the Future’ initiative, by which farmers supplying Woolies are audited on various criteria, including soil management‚ water use‚ biodiversity‚ waste disposal‚ pest management‚ carbon footprint and environmental laws.

Comment: If we may be so bold: Woolies’ food offering is world-beating, and this is reflected in these otherwise worrying interims. Their clothing programme, conversely, is patchy, and appears right now to be something of a drag on the business.

Here’s one bit of toughness you’ve been spared by this horrible year: overcooked turkey. Woolies, you see, is putting no frozen turkey in its freezers – not any – due to outbreaks of avian flu in Europe. Although they will have chilled fresh turkey products and turkey roast portions from countries in the southern hemisphere that have not been affected by the virus. And Pick n Pay seems to have plenty, so Christmas is saved! Also, you could buy yourself some nice chicken sosaties and a big slab of rump, joining thousands of other South African who are eschewing the over-rated fowl in favour of South Africa’s favourite cuisine, the braai.

Comment:

Taking another step on its Good Business Journey this week is Woolworths, which is specifying to farmers the maximum allowable agrochemical residue levels on the fresh produce they procure. “Agrochemicals?” you ask, a quizzical expression on your face. Simply put, they’re the natural or synthetic chemicals used to target pests and diseases in the crops we and our livestock use for food. In recent decades, their use has become increasingly regulated, and testing has now reached the point where parts per billion can be measured. With the rise of social media, concern over their use has at times verged on hysteria, as punters have become more informed about issues such as toxicity and the rise of resistant fungi. Riding this wave of information, Woolworths is working with its produce suppliers to implement integrated pest management practices, and encouraging them to avoid using pesticides and other agrochemicals unless absolutely necessary.

Comment: We have 7 billion people to feed, and only one planet with which to do it. But we need to ensure that we do so both responsibly and sustainably.

The Dapper One held its AGM last week, and according to various flies on the wall it was a fairly bland affair, with little in the way of explanation of what has caused the share to go off the boil these past months and why executive remuneration doesn’t reflect this reality. While Mr Moir did acknowledge that execution of the strategy in Aus might not have been all that, Simon Susman talked up prospects down under on the back of a four-day strategy session in that stricken geography; he is convinced that change is blowing across the outback like a mysterious wind. In other Woolies news, the retailer is an early adopter of something called “influencers” on something else called “Instagram.” Far as we can tell, the emphasis there is on the many fashion brands under the Woolies aegis, although by gosh some of the stuff on the woolworthsfood stream or thread or whatever looks good enough to eat!

Comment: Come on Woolies. Time to make the punters happy again.

Despite notable absences – Woolies among them – the third Black Friday delivered on its promise of long lines and selective discounts for South Africa’s cash-strapped shoppers. Interestingly, while the number of participating retailers was up, the number of discounted items was anecdotally down this year. The biggest winners appeared to be online retailers like Takealot and Superbalist, both of whose sites crashed under the pressure of insomniac shoppers in the wee hours of Friday morning, while Pick n Pay, buoyed by the enthusiasm of shoppers for its great deals on such quotidian items as coffee, nappies, detergent and toilet paper, extended the promotion to Saturday. Shoprite’s offering was also a hit, with shoppers queuing for hours for better than usual deals on basics like cooking oil, household sugar and confectionery. 

Comment: An interesting experiment, here in SA, where the tastes of upper income consumers tends to track those of their counterparts in developed countries, while the mid to lower LSMs have in their inimitable way made this retail fest very much their own.

Woolies posted a trading update last week which did little to dispel the concern around its last set of financials. Fashion, Beauty and Home sales in SA grew just +0.7% for the first 20 weeks of the current FY, against internal inflation of +0.9%, while down under, David Jones’ sales slid -5.3%. This latter they attributed to a couple of store refurbs and the implementation of a new inventory management system. On the upside – and it’s a big upside – food sales in the Beloved Country grew +9.3%, against internal inflation of +4.5%, with positive volume growth. This, say our gimlet-eyed colleagues among the analysts, demonstrates the essential resilience of the core Woolies demographic, i.e. the better-heeled punter, who appreciates Woolies’ insistence on quality, as delivered by a superb cold chain, even as the wolves howl at the gates of the gated community.

Comment: Is it perhaps time for Woolies to focus more sharply on the expansion of that part of the business for which it is truly and justifiably famous? We ask rhetorically.

It’s been a week of contrasts for the Dapper One, with a disgruntled punter arguing that the image of a dead yellowfin tuna on some of Woolies’ trucks was at odds with its message of responsibly sourced seafood, and that their promise of cage-free eggs – also displayed on trucks – was unsupported by the realities of food production. One Alison Clark took Woolworths to the Advertising Standards Authority (ASA) for the claims; the retailer, duly cautioned, promised to withdraw the images on the trucks within three months. On the upside, Woolworths became the first African company to sign the Forest Stewardship Council’s Vancouver Declaration on the sourcing of materials from responsibly-managed forests. The FSC provides a widely-respected certification system for businesses like Woolworths wishing to do the right thing while making a bob or two.

Comment: Woolies’ Good Business Journey is an integral and important part of its strategy; on the flipside, this means the retailer is held to a higher standard than its competitors by a passionate and informed customer base.

The MySchool programme, whose partners include the Dapper One, has raised over R500m during its 20 years of existence, and is currently raising R6m a month through its 1.2 million supporters. And in other news, Woolworths has just been recognised as a global leader in sustainable water management by CDP, the non-profit global environmental disclosure platform.

Comment:

Pick n Pay is beating Woolworths, Clicks and Game, any number of cute cat/llama combos and your last Mauritian holiday on Facebook, reporting over 1.7 million likes in the last three months. Elsewhere, Woolies is beating all comers with 400,000 twitter followers, 250,000 Instagram followers and 9 million views on YouTube. This according to research by Ornico, anyway. Our research indicates that they’re all pretty much even when it comes to mentions in a certain influential weekly e-newsletter though.

Comment:

This from Charmaine Huet, head of marketing over at Woolies: “78% of our revenue comes from credit cards, so we already know a lot about our customers. Now what we’re really thinking about is how do you really personalise the experience for them and how do you create content that is really personalised and resonates with each of them - and this is really difficult, it takes humans and data and AI.” AI, as you know, is something that people like Stephen Hawking and Elon Musk get apocalyptically exercised over, but not the marketing community: they wish to harness its awesome power to drive sales, and this ambition was on unchecked display at Shoptalk Europe, where the subject dominated conversation, from machine learning to visual search, natural language processing and more, and all of this to facilitate smarter and more personalised customer experiences. By 2020, said a whole bunch of speakers quoting Gartner, 85% of customer interaction in retail will be managed by AI.

Comment: And yet we will still value a friendly reaction from helpful and well-trained floor staff. More so, in fact. Remember that, retailers.

Woolworths, has been named by Ornico (a media monitoring company) and Africa Brand Index as the third best social media platform on the continent and the best social media platform in retail. The business has 20 social media channels operating through 12 countries, with a combined following of over 2.2million fans, attracting over 350,000 interactions a month. Woolies’ SA Facebook page alone reaches well over a million targeted South African consumers every week.

Comment:

Last week Woolies announced it new executive structure for its perhaps significantly-named Australasian operation. WHL Australasia will be headed up by regional CEO John Dixon, while David Thomas, current COO has been appointed as CEO of David Jones. Not a shakeup, perhaps, but something of a bedding down at a time when the recent disappointing results from down under must have caused even the steadiest hands over at Woolies to tighten their grip imperceptibly on the Royal Dalton teacup.

Comment:

Rumblings from Down Under are that Solomon Lew, one of Australia’s shrewdest investors, has surreptitiously availed himself of 10% of the shares of Myers, a big department store and rival to David Jones, owned by South Africa’s own Woolies. He had pulled a similar stunt prior to the DJ acquisition, and some of our more reckless analysts are speculating that this may presage another takeover – perhaps even by Woolies, although why they’d want to entrench their challenging Aussie positon with a move like this beats us. Stay posted… 

Comment:

In further evidence that businesses are at last coming to their senses, Woolies’ top management will not be receiving their Christmas bonuses this year, as the business did not perform well enough to justify this. This means that the top execs will have a mere R58.5m to splash out on Lego and brandy butter come December 24, compared with the R94m they dropped in Mauritius and Plett last year. There’s some disagreement about why Woolies has done so dismally Down Under this twelvemonth past. Some analysts believe that the Dapper One failed to learn the lesson from its acquisition of Country Road, which took the better part of a decade to turn around, and that they have adopted a cookie-cutter approach, attempting to turn South African success into Aussie dollars. Woolies itself disagrees, saying that they’ve gone into Aussie retail with all due humility, and that the fault lies with the shaky retail infrastructure of the David Jones business. 

Comment: Whatever. Humility and even a modicum of sacrifice among retail execs certainly can be a bracing though.

With a muted fanfare played on a solo oboe, the Woolworths results are in, and they are, let’s face it, not all that: turnover was +3% to R74.3bn, while adjusted pre-tax profit (which we’ll have to quote in the absence of any info on trading profit) was down -8.3% to R5.5bn. Woolworths Food was quite naturally the top performer, growing sales +8.6% over a hellishly difficult period. David Jones, equally naturally, was not, with sales up only +1% and comparable sales down -0.7% in a business into whose turnaround Woolies has already sunk R2.9bn. A new and promising aspect of the strategy Down Under is to bring the South African food model to hungry Australians. Back home, retail space grew +4.6%, +7.6% taking only food into account. Mr Moir seems as sanguine as ever, though, despite the challenges abroad and the competition back home, with Checkers making a strong play in Woolies territory. “We just do premium really well,” he says. “It’s a difficult business to be in and we are far from being complacent.” This in a nutshell. But if it’s more info that you want, click here.

Comment: It’s our considered belief that the Dapper One will emerge from this difficult period both stronger and wiser.

Woolies have appointed media buffs TMI to handle their above-the-line media planning and buying, joining businesses like Kraft Heinz, Dunkin’ Donuts and Baskin Robbins as a recent win for the agency. TMI already handles Woolies digital portfolio, and were stoked to get the business after a robust pitching process.

Comment:

A trading update from Woolworths, and it tells a by-now familiar story of a well-run business up against the economic and social realities of the day: sales for the year through June were up just 3%, impacted by tough second-half conditions in both South Africa and Australia. Sales of clothing and GM back home were up just 1.4% against internal inflation of 6.6%, and like-store sales were down -0.9% against retail space growth of 2.2%. Food fared slightly better, growing ahead of the market at 8.6%, with internal inflation of 8.4%; like-store sales were up 4.6% and retail space growth +7.6%. Down under, sales at David Jones were up 1%, while Country Road grew 5.1% despite difficult trading conditions. The really bad news, however, is that the retailer could see a decline in headline earnings per share (HEPS) – the most reliable indicator of core profitability – by between 5 and 10%.

Comment: The continued performance of Woolies against economic headwinds used to be a watchword. As the reality of negative growth sets in even for middle- to upper-income consumers, and upper-income consumers seem to be thinking twice about paying what at times is regarded as excessive premium pricing in food, this is no longer reliably the case.

“Sourcing sustainable commodities is a key part of the Woolworths Good Business Journey 2020 goals,” said Tom McLaughlin, Responsible Sourcing, Woolworths Foods. (a) We didn’t know that was a job title, so good one there Woolies, and (b) we didn’t know that Woolies were so far along their Good Business Journey that even the materials for labelling had come under consideration. Even better. Basically, packaging materials supplier Avery Dennison will provide FSC (Forest Stewardship Council) certified materials to Woolies’ supply chain partners Rotolabel, which will convert them into labels customised to Woolworths’ requirements. “This collaboration is the first of its kind in South Africa,” said Mark Ellis, Commercial Director for Avery Dennison Label and Graphic Materials in sub-Saharan Africa. “It demonstrates that sustainability can be integrated into almost every level in the label value chain – from procuring materials, manufacturing to retail.” 

Comment: A seemingly small but highly significant step on the Journey.

Analysts are concerned that Woolies may be over-investing in improving the fortunes its appallingly-named Aussie business Davo Something, Dave Wilson, Davey Jones, something like that, and in trying to match cheaper competitors on price here in the Beloved Country. There’s also some concern among our sharper-suited colleagues that The Dapper One has underestimated the impact that outfits like Zara and H&M will have in the market. Rather than meeting them on their favoured battleground of fast fashion, Woolies are attempting to undercut them through discounting. And then, as reported earlier, there’s the assault on Woolies’ posher punters by the likes of Checkers, with its gourmet pret-a-manger offering. 

Comment: All of which adds up to hard times in the marbled halls of SA’s classiest retailer.

Taking things to the next level as usual is Woolworths, aka The Dapper One, which has hooked itself up with something called a Retail Advantage solution from a business known rather excitingly as HighJump. Woolies, you see, finds itself in the tricky, if enviable, position of having its stores increasingly doubling as fulfilment centres for online orders, and this requires some fancy footwork supply chain-wise. Retail Advantage offers a picking solution which will help Woolies reduce the number of times an item is handled, and eliminate inefficient and archaic paper records in the system, making better use of its time, space and human capital. This in turn will help the retailer standardise its processes and increase productivity. To complement the system, the business has also invested in the requisite hardware, including cool-crates, custom trolleys and wearable scanners, bringing all the mod cons of an up-to-the-minute DC into the store.  

Comment: Brilliant stuff, which takes us back to the glory days of Efficient Consumer Response (ECR), a visionary movement which has had much to do with the shape of the modern supply chain.

Doing the right thing by the smaller supplier this week is the Dapper One, aka Woolies and i.e. Woolworths, who have teamed up with the Department of Trade and Industry (dti shurely shome capsh - ed) and the Independent Development Corporation (IDC) to support the opening of the new K9 Pet Foods’ factory in the Cape. K9 is owned by a team of three women headed up by founder Fazielah Allie and has partnered with Woolies to supply the retailer with its own brand canned and pouched pet food. Armed with the agreement to supply Woolies, K9 was able to secure R20 bar from the dti’s Black Industrialist’s Incentive Scheme and an extra 30-odd from the IDC. Couple of slabs of cement, some steel girders and a roof, and you have yourselves a factory. Nicely done. 

Comment: K9 already employ 32 local staff; more will surely follow. That’s how you grow an economy.

Skyfii, a name which can only be pronounced in an Aussie accent, and is in fact an Australian business, has snaffled up the contract to roll out its ‘IO' Software as a Service (SaaS) platform subscription data analytics services to 126 stores, reaching 500 in the next couple years, and the understanding that it will rub analytics group-wide if all goes well. “This type of sophisticated data analytics and customer engagement tools for venues is the future of retail and will enable us to make informed, data-led business decisions, while improving customer experiences,” says Woolies’ head geek Jan Meyer. Indeed: the insight provided by the software will help Woolies fulfil its ambition to be the leader in the personalised shopper experience, to measure the performance of stores and to optimise traffic in the aisles, inter alia. 

Comment: Next level stuff from the Dapper One, which in our humble opinion is fast becoming a global leader in retail innovation.

Woolworths began its Good Business Journey ten years ago, huzzah! Here are just three of the milestones:

Comment:

And here’s a grab bag of Woolworths stories for you, which together might form a compelling overarching narrative as we in the rands-per-word industry like to say. First up, Woolies have a new takeaway outlet in – where else – Longmarket St., Cape Town, which rejoices under the snappy yet parochial name of Now Now. And what’s even more edgy is that you can place your order via the Now Now app, then pick it up. Next, Woolies has become the first major international retailer to join the EP 100 campaign, by which it promises to double its energy efficiency by 2020 as its contribution towards a net-zero-emissions economy. And finally, Woolworths SA MD Zyda Rylands has received the first-ever World Retail Congress Woman of the Year Award "in recognition of her inspirational work‚ both as an international leader‚ philanthropist and for her outstanding commercial success".

Comment: Great stuff all round after some iffy weeks for the Dapper One. Nice.

Woolies is combining its antipodean assets in what promises to become the biggest Aussie super-group since ACDC. The idea is to combine David Jones and the fashion brands under Country Road into a single structure, which will up the labour force by 200 but otherwise add the efficiencies that come with group functions while allowing the brands independence. This after the announcement last year of the relocation of both businesses onto a single Melbourne campus. The new structure will be headed up by David Jones’ John Dixon as CEO.

Comment: It is fondly to be hoped that the restructuring puts Woolies back in the driver’s seat of the speeding road train that is David Jones.

Kudos to Woolies for their latest attempt at responsible retail, which this time involves selling only tuna which has been individually caught using the Greenpeace-approved pole and line method. This has secured for the Dapper One a Marine Stewardship Council (MSC) certification for the tough but tasty fish, which Woolies sell in cans under their Fishing for the Future initiative. Only 16% of all tuna caught globally is caught by this method, which ensures that only fish of certain maturity stay on the hook, and which saves the lives of other marine creatures, such as turtles and dolphins, which may be swept up in nets or snagged on long lines. According to Greenpeace, the world’s fishing fleet is 2.5 times too large to be sustainable, so Woolies’ efforts, while commendable, are a drop in the proverbial ocean.

Comment: It is truly excellent, though, that they are taking the trouble.

Last week, those in the know would have received our timely and insightful mailer on the Woolies interims. For those who didn’t, a recap: turnover up +6.7%, with HEPS, the one true measure of profitability, down an extremely disappointing -4.3%. The culprit, as is the case with so many South African disappointments, was Australia, where slower economic growth due to lower commodity prices and muted consumer confidence have hit sales at Woolies’ now-substantial retail assets in that cursed and blighted land. Group wide, food put in a better showing than clothing, with sales up 9.5% from R12.1billion to R13.3billion and the latter growing only 3.5%. The decline in margin may be attributed to Woolies’ aggressive price cuts and promotions to maintain market share during a challenging ambit.

Comment: Over to you Mr Moir, as unrattled as ever: “A good performance in a tough market, both by clothing and by food. We did the right things at the right time”.

A toughish week for the Dapper One, which released a trading update on Thursday to the effect that its headline earnings were likely to drop by up to 7.5% for the six months through December. This some analysts are attributing in part to a poorer than expected performance by the newly-acquired Australian assets – Country Road’s sales, for example, were 0.9% down on last year’s – and by declining volumes in both food and clothing as even SA’s posher punters experience the squeeze of a struggling economy. The irony of Woolworths’ position is that as a business that is already extremely well-run, it has little wiggle room in which to improve its performance. In other Woolies news, it has once again fallen prey to the pitchfork-wielders of social media, which have pursued it to the castle, angrily demanding that it drop its new, biliously-coloured returnable plastic egg trays in favour of the drab old compostable ones.

Comment: Ever the lighting-rod for public opinion, and this week also a bellwether for the embattled global economy (what’s one of them? Ed), it’s not easy being Woolies right now.

Did someone say something about a mega merger? Pffft. The really big news this week is that you won’t have to pause The Crown on Netflix just because you decided to pop out for some fresh pasta and organic tomatoes. Your favourite retailer (if you’re of the pinot-swilling, Tatler-reading demographic), you see, has launched free Wi-Fi in 85 stores. And that’s not all: in order to meet the demand of its double-digit growth in online sales over the holiday period (half of that in mobile, much of it in staples like bread, milk, meat and salads and holiday fares such as bubbly and gifting items), Woolies has also opened its first dedicated warehouse, to provide the storage and delivery of online clothing, beauty and homeware products. Rather delightfully, it is calling this facility a “dark store”.

Comment: This puts us in mind, rather, of Gru in “Despicable Me” – a black suited villain with a heart of gold…

After a surprisingly downbeat set of results, Woolies’ shareholders, long basking in the reflected glory (and enjoying the generous dividends) of the Dapper One, are beginning to become restive. Thus it is that we find them rebelling in substantial numbers (well, at 18.6%, quite substantial numbers) against both the reappointment of the auditors and also against the remuneration policy at last week’s AGM. Auditors EY have been scrutinising Woolies’ books for 84 years, if you’ll believe us, and according to the pinstriped worthies at the Independent Regulatory Board for Auditors (Irba), this is quite enough thank you. They recommend that auditors get changed every ten years or so to keep them fresh, and some of the punters, it appears, agree. In other Woolies news, South African CIO John Hunt is heading to Australia to take over the computers and stuff at Woolies’ holdings on that blasted and benighted land mass.

Comment: And perhaps to learn to love the game of rugby once more.

For the first time in, like, forever, The Dapper One has issued a trading update that is less than rosy. Quite substantially less than rosy, in fact, unless your roses grow in hues of lead and soot. Sales volumes have gone flat across the Group – food, non-food, Australia, the works. Previously, non-food had held up surprisingly well given the investment Woolies and others had made in keeping food prices low. This effect seems now to have run its course, with growth in Clothing and GM of just 2% against space growth of 2.9% and internal inflation of 7%.  Food sales were up 9.1%, but trading space increased 8.3%, and inflation was 9.2%: flat, flat, flat. In Australia, growth in retail space at David Jones outstripped sales growth at 2.2%, while sales at Country Road declined -2.8%.

Comment: Given what ails us – zero economic growth, zero job creation and negligible salary increases just to kick off – this inevitable tightening at Woolies should come as no surprise.

Woolies has been in business for 85 years, a fact that it is celebrating with characteristic responsibility by partnering with the MySchool MyVillage MyPlanet fundraising programme in making fifty R20,000 bursaries available to Woolies customers. Anyone can enter – all one needs to do is swipe the old MySchool card at the register, with a double swipe awarded for purchases of school uniforms and kids’ apparel. Woolies first opened shop in 1931 in the Old Royal Hotel on Plein Street, in Cape Town. It now has 440 stores in the Beloved Country and 86 elsewhere in Africa, and employs over 31,000 people. It has been MySchool MyVillage MyPlanet’s most visible supporter and has raised over R400million for the programme since getting onboard in 1999.

Comment: Excellent work, that unusually-well-attired retailer. A credit to the industry of which you are a veritable doyenne and an undisputed elder statesman.

Sending an SOS to the world this week is Woolworths, who have announced that – in another of their South African firsts – they will be packaging their entire fresh milk range in bottles consisting of 30% plant-based plastic. Technically known as a biopolymer, the material is produced by Brazilian outfit Braskem, and is chemically indistinguishable from the real, fake thing. This also means that the entire bottle will still be 100% recyclable. The idea for Woolies is partially to reduce the carbon footprint, but also to show support for a brave new industry intent on doing right by dear old Mother Nature. Plants, you will recall, capture carbon from the atmosphere rather than putting it up there, so turning them into recyclable plastic bottles is good on so many levels.

Comment: A small step for Woolies on its Good Business Journey of a thousand miles. Sometimes, though, the small steps are the ones that count. Or something.

Oi, you at the back? No comments about Blundstone boots, short shorts and cork hats, gettit? Woolworths, you see, has through its Aussie subsidiary Country Road bought a 100% stake in menswear retailer Politix (check sp. Ed) for about R630million, tightening its stranglehold on fashion in that benighted country, which once, we are told, played a decent game of cricket.

Comment:

The Dapper One has announced the appointment of a new CEO for its Country Road division down in the blasted Antipodes, the classily-monikered Scott Fyfe, who comes courtesy of 20 years before the mast at Marks and Sparks. Good luck, that man.

Comment:

We say Woolworths (see section header above) but what we’re really talking about here is their execrably-named Antipodean acquisition Brad Murray. Erm, Les Forsyth. Jonty “Ripper” Randall. Something like that. David Jones? Nah, that couldn’t have been it. What kind of name is that for a retailer? Anyway, you know the one. Turns out that D. Jones has something Woolies is very, very good at: getting the posher punter to part with their pecuniary possessions, even when times are tough. And as Jones roll out their upmarket food stores with their premium private-label goodies in Melbourne and Sydney, competitors Woolworths (not that Woolworths, another one) and Coles are getting antsy, as their shoppers tend to be more price sensitive. Still, together they control over 60% of the Aussie food market, and Jones is unlikely to achieve the sort of scale that would become threatening to their very existence. 

Comment: Seems as if Australian retail is even more stultifyingly consolidated than our own market. Why are we not surprised.

So here we are again, in the midst of results season. Hasn’t time flown etc? And my, hasn’t Woolworths gotten big this last year! Group sales up 16.4% to R72.1billion, and operating profit an absolutely whacking 24.7% to R6.97billion. Clothing and GM was up 8.2%, or 4.4% in like-store sales, while Food came in rather handsomely at 11.9% and 5.7% respectively. And Down Under, David Jones grew sales at 8.4%, and 7% in like stores. What to say? Well, once again, Woolies have proven themselves resilient in tough times, trading as they do on the fortunes of the better-heeled among us. Food sales were ahead of the market, and in the face of the drought and a weaker rand they invested heavily in price to keep the punters coming in. And even the punters without the cash on hand kept coming: the debtor’s book grew 8.1% despite tightening regulations. 

Comment: Even the gimlet-eyed men and women in the analysts’ seats were observed to weep on the announcement of these results.

It has begun. In the parched and starving Antipodes, with their blasted mudflats and ravaged, deserted cities, Woolworths Holdings Limited has taken its first bold steps into Food and Grocery Retail. Woolies supplier In2Foods, which sells prepared foods to the South African business, has apparently entered a JV with Victoria’s Yarra Valley Farms, a fresh produce wholesale supplier, and is apparently looking at establishing a production facility in Bankstown, New South Wales. All of this with a view to bringing premium foods into the mix at the hideously-named Woolies-owned retailer David Jones. “We are building the business, we have got some of our suppliers from South Africa who have come over and they have invested in joint ventures in this marketplace, we are building a supply chain, we are employing people, we are putting a team together,’’ confirms Ian ‘Mad Max’ Moir.   

Comment: And once we’ve sorted out grocery retail, we’re coming after Super Rugby.

At the conclusion of their first three-year collaboration, Woolies and the World Wide Fund for Nature (WWF) have announced the inception of a second partnership, this one aimed at improving the stewardship of water resources nationally; exploring low carbon pathways; reducing the potential negative impacts of agriculture; improving seafood and in particular aquaculture sourcing; and reducing food waste throughout the supply chain. Partnerships between business and advocacy groups are the future.

Comment:

Slow news week so let’s talk the design of Woolies’ new Australasian head office in a town called Melbourne, Australia, where as you know, the Dapper One has been doing good things with ineptly-named local retailer Peter Johnson. Um, Barry Meldrum? Michael Higgins? David Jones, maybe. Something like that. Where were we? Ah yes: With the redevelopment of David Jones’ apparently ‘iconic’ building in Sydney into a David Jones flagship, Woolies is consolidating all of its head office space – Jones, Country Road – into one location in downtown Melbourne, conveniently close to the distribution facility in Truganina. Better yet, the new “centre of retail excellence” as Mr Moir puts it, will achieve both synergies and productivity benefits worth $10million per annum from 2019 onwards and, best of all, will be the nerve centre for Woolies’ ambitious expansion plans into Australasia. 

Comment: The expansion of Woolies on the Lost Continent and beyond is one of the most thrilling stories in retail globally right now.

Bam! A Woolies trading update. Group sales up 16.4% for the 52 weeks through June, with clothing and GM up 8.2% and food up a handsome 11.9%, including food service concessions, with like-store sales up 5.7% and net retail space a whopping although still sophisticated 9.3%. Apparel was a bit of a bust, sadly, what with winter starting late and continuing warm, as it is wont to do these days, can’t think why. And the debtors are up a tad, with the book showing an increase of 2.5% and impairment up a natz from last year’s 5.4% to 5.7%. Otherwise all good, even in the blasted Antipodes, where the ineptly-named David Jones (couldn’t they at least rename it something classy like Chez Dave or House of Jones?) grew sales 8.4%, with like-store sales up 7% and retail space up 3.5%. And if you prefer a little more meat on your update, read our synopsis of the results here.

Comment: So there you have it. A retailer which knows what it’s doing, keeping on doing it.

SA’s most dapper retailer, you will recall, struck up sometime last year a relationship, or indeed a transaction, with The Voice’s most dapper judge, and it was a match made in loyalty heaven. Woolies WRewards “Are you with us?” campaign, fronted by coolest person in the history of the world, ever, Pharrell Williams has just been awarded Best Loyalty Programme Marketing Campaign of the Year at the 2016 International Loyalty Magazine Awards. The campaign enticed customers to join Woolworths sustainability journey and “make sustainability cool” for the next generation of South Africans, raising R400k for the Red Cross Children’s Hospital along the way and established the “R100 Million for Education” drive, together with MySchool MyVillage MyPlanet.

Comment: Nice one, Woolies, especially since it was all conceived and conducted in-house.

Slow news week, so here’s an item from the fascinating world of herpetology: it turns out that Africa’s most dangerous snake is not the Black Mamba, but the checkout aisle, which winds its sinuous way from the gondola-ends to the tillpoints down at your local Woolies, tempting you and the littlun’s alike with an irresistible assortment of chocolate, sweets, crisps and Hello magazines. Or it used to, anyway. Woolies has met its ambitious target of replacing these temptations with a more wholesome mix of dried fruit, nuts and biltong at 166 of its stores, and the rest will follow through to the end of 2017.

Comment: Thus building on their commendable tradition of combining the commendable with the profitable, to the envy and confusion of their competitors.

Continuing its Good Business Journey by sea this week would be Woolworths, which, even as our international waters are beset by predatory armadas of Chinese trawlers, have announced that they have met the sustainable seafood targets they set for themselves in 2013, having introduced a sustainable seafood policy in 2008. These goals were ambitious: all of its wild-caught seafood was to be green-listed according to the World Wide Fund’s SA sustainable seafood initiative (WWF-SASSI), or caught from a fishery OK’d by the Marine Stewardship Council (MSC), or from a fishery undertaking credible steps towards improvement. By May this year, 97% of all seafood sold by Woolies was sourced this way.

Comment: As urgent as the issue of climate change is to the deplorable state of the world’s oceans, which require initiatives like these if we are to continue to feed ourselves from their rapidly diminishing bounty.

Hard to believe, but the Dapper One has been on its Good Business Journey (GBJ) since 2007, proceeding at a sprightly pace in a pair of responsibly-sourced and handsomely-stitched leather shoes. To recap: they’ve reduced their environmental impact and increased their social and economic impact across the value chain, focusing on 8 key areas from energy, water, waste to health and wellness, with over 200  targets, and they’ve reportedly managed to achieve a handsome R567m in savings, too. Now they’ve announced their GBJ goals for 2020, and they’re at least as ambitious: for the first time, Woolworths will incorporate their foreign holdings – in Africa and Australia – into the targets, which include saving 500bn litres of water over 5 years; ensuring the company halves its energy impact by 2020, achieving 100% clean energy by 2030 and contributing R3.5bn across the Group to communities.

Comment: Ambitious and inspiring goals.

Meanwhile, down in the Blasted Antipodes, Woolies is giving local retailers a run for their money: since the Woolies takeover last year, retailer David Jones (“Call me Dave, mate.”) is expanding, while rival Myer is closing stores on the site of one of which, in Wollogong, David Jones will in fact open shop.

Comment:

Excellent work there from Woolies’s own Reeza Isaacs, voted CFO of the Year in the eponymously-named awards. Well no, obviously the awards are not named “The Reeza Isaacs Awards”; They’re named “The CFO Awards”, the eponymity referring to the position rather than the identity of the winner. You’d think we wouldn’t have to explain that, but there you go. We have it on good authority that the award itself was presented at a suitably restrained dinner, after which the bill was split equably and efficiently, without the rising panic and snappish irritation that generally attends these things when there isn’t an accountant at the table.

Comment:

Greenpeace Africa have ranked SA’s retailers according to their renewable energy vision, in a report entitled ‘Shopping Clean – Retailers and Renewable Energy’, and no surprise, Woolies tops the list, albeit at only 4 out of 10, Greenpeace being generally unimpressed with the progress out industry has made towards clean energy. On this score we’d beg to differ – we believe that progress has been rapid, investment significant and by and large the vision clearly articulated.

Comment:

For a fascinating dive into store design as a pillar of retail innovation and success, we’d heartily recommend that you have a look at this excellent interview with our good friend Nic Criticos, head of store design at Woolworths. A good store, he says, is two things – “a machine designed for selling… and a brand building tool”. Woolies, as well you know, have long been at the leading edge of retail innovation, both here in the Beloved Country and beyond, a fact that Criticos attributes in part to the trying conditions here – the relatively low production capacity and skill levels, and the slow economic growth. He’s characteristically amped at the way store design is going now, with online and physical environments becoming integrated into a 360 degree shopper experience (our words, not his) and the store repurposed as a social hub, where people come to meet, not merely to shop.

Comment: At the heart of Woolworths’ success has always been an investment in exceptional people. Nice one.

Woolies CEO Mr Ian “The Transporter” Moir, he of the sharp suit and the gimlet eye, is offloading about a third of his shares in the dapper retailer, amounting to almost R60millions worth of the much-admired stock. This, apparently, to settle the tax bill on his vested restricted share plan (Anyone? Anyone? Us neither.) and also to diversify his portfolio. This has caused certain analysts to get jumping, suggesting that better returns are to be made elsewhere and that now might not be the time to buy Woolies shares. Woolies has also mentioned that it expects toughish times in its two major markets, SA and Aus, for the forseeable future.

Comment: But come on. By our estimation, Mr M still owns R120-odd mils worth of Woolies stock, enough of a vote of confidence to satisfy the meanest-spirited analyst out there, surely.

It being a slow news week, here’s something about peanuts, which evolution has seen fit to render deadly or at least uncomfortable to an inexplicable 1-2% of the human race. And which Woolies inadvertently included with insufficient labelling in 12 of its ice cream and sorbet products, which are now safely back on the shelves, labelled up and ready to offer some relief from the unseasonal late-summer heatwave. Woolies have not divulged how many nuts were actually lost through the recall. Two of the affected lines have been discontinued, while another two are temporarily out of stock.

Comment: One forgets sometimes that with its massive private-label offering Woolies is almost as much a supplier as it is a retailer, and must shoulder the burdens of consumer accountability that come with both.

Some revealing stuff this week from The Dapper One about how they intend to continue to totally crush it for the forseeable future: they’re going to use those computer gadgets we’ve been seeing more and more of these days. That’s right: it’s all about data-driven strategy, apparently, and in this regard Aussie businesses Witchery and Country Road are the leading lights in the group. Feeding the need for this data is an increasingly wired shopper base, with online now accounting for 20% of sales at Country Road, for example, and growing at 55% per annum; and the large number of punters with Woolies’ plastic in their wallets – 73% of shoppers now carry a WRewards, MySchool or Woolworths credit card, and these represent a rich seam of data and insights. That’s not the only change coming down the pike: in ten years, black shoppers have gone from 20% to over half of the total in the South African business, and this is likely to continue. On the downside, Woolies expect competition from international retailers to be a growing feature of the SA retail landscape.

Comment: Fascinating stuff from a retailer which is adept at keeping up with the challenges and opportunities of the day.

Those Woolies interims then, which have been rubber-stamped and revealed in all their glory: sales up 17% to R35.5bn, or 12% if you exclude Aussie retailer Bruce McDingo – sorry David Jones, slip of the pen. Food was a particularly strong performer, riding on the back of a price increase averaging 5.7% which Woolies’ better-heeled punters seemed willing to swallow. By way of contrast, Shoprite managed an increase of just 2%. Woolies expect, however, that even the upper LSMs will be tightening their belts as food inflation continues its inexorable rise over the next 6 to12 months – although they also believe that they will continue to take market share from the competition. Under these circumstances, and this is not a phrase we write lightly, thank God for Australia, responsible for 43% of operating profit with the dear old ZAR weakening 26% against the brash and probably dishonest Aussie dollar.

Comment: Woolworths are generally tastefully bullish about their prospects. When they start to warn us about tricky times ahead, you know that we have found our way up an unattractive branch of the river and have lost our primary means of propulsion, as they themselves might have put it.

Woolworths (and indeed David Jones of Australia) are rolling out a new private label fashion brand, which rejoices under the  fashion-forward name of David Jones … wait, that can’t be right --- it is? … good heavens … David Jones Classic Collection. Timeless pieces with a hint of seasonal fashion on a bed of wardrobe basics, we are told.

Comment:

So Woolies’ sales were up 12.3% for the six months through December 2015, or 17.1% if you include the gains attendant upon the acquisition of depressingly-named Aussie retailer David Jones. Food grew nicely at 12.1%, with inflation of 5.7% and like-store sales up 5.8%, while clothing was not far behind at 11.7%. General Merchandise, an area with which The Dapper One is not immediately identified, was up only 5.8% though. But back, reluctantly, to Aus, where David Jones sales were up 11.2%, and the Country Road group of clothing brands grew 13.4% in dollar terms. And once more to the Beloved Country, where net retail space grew 9.8%, and shareholders are being promised returns of between 25 and 35% higher than they snaffled up for their shares in the first six months of the 2015FY.

Comment: Woolies’ unassailable position in the mid to upper LSMs continues to provide a measure of defence against the depredations of a tough economy.

Taking shareholder activism to a whole new level last week were the National Coalition 4 Palestine, #BoycottWoolworths, who bought Woolworths shares in order to secure entrance to the AGM, where they played merry heck with the agenda, tabling such questions as “Why is Woolworths bugging our phones?” and “Is it true that you have threatened media houses with the withdrawal of your advertising rands?” (No and no, according to Mr Moir, but we’ll look into it.) It all made quite a refreshing change from the usual “Where is my dividend?” and “How come the board are all driving new Maseratis?” And the really great thing was, the activist shareholders in question all saw a 30% increase in their investment, which must have pleased them no end.

Comment: Again, it seems to us that Woolworths has been unfairly singled out among retailers, at a time when the line between words and action is precariously fine.

The Dapper One, we are pleased to announce, is putting tilapia on the menu with characteristic aplomb, introducing two lines: lightly smoked with coriander & sriracha lime butter and lightly smoked with pink peppercorn rub & coriander butter. This robust treatment, flavour-wise, is perhaps the best way to wring interest out of an otherwise bland if delicately-textured fish, which nevertheless has the inestimable virtue of being farmed rather than pulled willy-nilly out of Mother Ocean. And indeed, the lines are certified by the Aquaculture Stewardship Council (ASC) as originating from a responsibly-managed ASC-certified farm. And speaking of responsible, Woolies are proud to announce that they have completed phase one of what is apparently a protracted and complex operation on getting sweets and chocolates out of the checkout lines, with 104 stores now compliant.

Comment: A feature of the Woolies Good Business Journey is doing the right thing without being nagged about it. Nice one, that tastefully attired retailer.

We don’t recall you asking for a Woolies trading update, but just in case: for the first twenty weeks of their FY, the Dapper One grew sales by 17.7%, or a more muted but just as tasteful 11.7% if you exclude results from the newly-acquired David Jones of Australia. GM sales were up 8.1% and food up 11.7% while trading space grew 9.2%. Moving to Australia, which we certainly hope you don't, David Jones increased sales 12.2%, and Country Road (including South Africa) 14.2%. And if you had the jolly good sense some time ago to have a little flutter on the stock, your shares would now be worth 35% more than they were this time last year.

Comment: Which is what we call a result.

Woolworths, as you may know, is involved in some product labelling irregularities, resulting in the recall of 12 ice cream and sorbet products which were not labelled with the necessary peanut allergen warnings. Recall executed, apology issued, and there, one assumes, it rests, right? Not so fast, according to the National Consumer Commission (NCC), whose boy sleuths and girl detectives have discovered that the Dapper One – gasp – is unable to account for exactly how many units were affected. In fact, the answer is quite simple. Simply count the number of lawsuits, or writhing, puffy-featured peanut-allergic ice cream freaks, and Bob’s your uncle.

Comment: Retailers are the big corporates with the largest public interface, by a long margin. They provide a tempting and easy target for all sorts of special interest groups, and the crusading hacks who follow them.

Among Woolworths’ worthier projects is this one: the creation of school food gardens around the country via various organs of the business – MySchool MyPlanet MyVillage and Woolworths Financial Services in the case of the Chapel Street Primary School in Woodstock, and The Woolworths Trust, in partnership with Food and Trees for Africa (FTFA), in the case of the Impumelelo Primary School in Bohlokong. Whoever does it, whatever their involvement, it’s great work.

Comment:

Until recently, Australia had to include on its already encyclopaedic list of disadvantages the fact that its prime minister was a right wing ex-pugilist whose only achievement was a plan to dynamite the Great Barrier Reef. Now that Tony Abbott is gone, Australian punters have dug themselves out of their pit of cynical despair and returned to their national mood of crowing sarcasm accompanied by a willingness to spend freely at oddly-named retailers. But don’t listen to us, listen to David Jones (and Woolies) CEO Ian “The Transporter” Moir. “People feel more confident there is a government that is more in charge,” he says “And it’s reflecting in how we are seeing our business performing. It’s slightly better than it was before.” Woolies bought DJ’s for $2.2billion late last year, and under competent management, the business has seen sales grow steadily ever since.

Comment: It’s amazing what a spot of grown-up leadership can do for a business and indeed an economy. It’s an experiment we might wish to try here in The Beloved Country come 2017.

Having been the recipient of more than one sustainability award, Woolies has decided that it’s time to dish some out. So it has launched the Woolworths Sustainability Award, to be given at the Eat Out Mercedes-Benz Restaurant Awards to a restaurant that serves as an inspiration to both consumers and the food industry, creating greater awareness of responsible shopping and eating. To die for.

Comment:

“South Africa’s retail culture is a brutal business.” Don’t take it from us, take it from a “leading industry figure” in Australia, who was bemoaning the removal from office of Ian Nairn, CEO of underperforming Woolies’ acquisition David Jones. He is being replaced by John Dixon, ex-of Marks & Spencer in the UK, from which he resigned some months ago, leading the Aussies to clutch further pearls about the perfidy of foreign businesses. “You don't often see someone doing a pretty good job get removed,” said another commentator. Word on the street is that Een Neen, as he’s known in Australian, and Woolies CEO Een Moyah didn’t exactly see oy to oy. The move was so sudden, complained another sodden-tissued insider, that David Jones didn’t even have time to pull their Caulfield Cup invitations with Nairn’s name on them.

Comment: Whatever the Caulfield Cup is. Like we care.

A couple weeks ago we reported the truly brilliant news that the Woolies snake – that insidious corral arrangement that funnels punters to the tills, there to be fleeced of their hard earned – was shortly to be divested of its sweets and chocolates, rendering it less tempting to tots and husbands alike. It appears that the swiftness of the impending move was overstated, and it will take some months, starting with the larger format stores. Gummy snakes, gu…meee… snakes…

Comment:

Continuing to bring a light unto the godless this week are Woolworths. Not content with teaching Australians to appreciate a well-turned cuff and to wear long trousers, The Dapper One is expanding its sustainable business model to its recent acquisitions Down Under. Over the years, as you know, Woolies has taken practical steps to reduce its carbon footprint, like automated lighting in its store and liquid nitrogen refrigeration in its delivery trucks. While the conversion has sometimes been costly, its resulted in a 40% savings in consumption over ten years, several prestigious international awards and the gratitude of a customer base which wants to buy as green as it can. According to CEO Mr Moir, these practices will be exported to the Antipodes in the interests of consistency. “We have a responsibility as a business, regardless of what the cost may be, otherwise we won’t have a sustainable planet in the long term,” he says.

Comment: You will recall that until very recently Australia had a Prime Minister whose major policy contribution was a plan to bomb the Great Barrier Reef.

The Woolworths turnaround strategy for Aussie acquisition David Jones is showing early signs of succeeding, with sales for the 11 months through June growing 6.4% to $Aus1,9bn, and operating profit rising a bushwacking 28.8% to $161m. Even more encouragingly, sales rose 10.7% in the second half of the FY, lifted thither in part by the disciplines Woolies has introduced into the business. The Dapper One has cut 180 underperforming brands from the racks, adopted a new pricing architecture, and banished the spreadsheets by which the once-creaky retailer kept track of things. Next up, getting more customer data out of the loyalty programme and perhaps venturing into food, with WCafé’s and perhaps gourmet standalone stores coming into the mix to bolster the efforts of the four underperforming food halls.

Comment: Touch of class, eh. That should do the job.

This is huge (with a rider, see comment, below): South African consumer goods retail has it first female CEO, and why are we not surprised that the retailer in question is our own dear Woolworths, never one to shy away from a the road less travelled? That was a rhetorical question, designed to make an argument rather than to elicit knowledge. Zyda Rylands – who was appointed as MD for Foods in 2010 and has been with the group for 20 years – will take over as CEO of Woolworths South Africa. Since Rylands took over the portfolio, the food business has grown 83%, with a 240% growth in profit. 

Comment: This is excellent stuff, to be sure. However, to put it in context, Woolworths South Africa accounts for 30% of group sales since the Australian acquisitions. So it’s going to be truly revolutionary, for example, when Mr Moir steps down for a bit of well-deserved and hands over the entire shooting match to Ms Rylands. Until that happy day, we celebrate.

No more, those seductive slabs of Lindt, lined up shoulder to shoulder in their crisp white packaging, like debutantes at an exclusive Swiss finishing school. No more, those square plastics tanks writhing with gelatine serpents and dolphins. No more the involuntary swelling of the saliva glands, or the importunate tugging of a child at the hem of your garment. As part of its Good Food Journey, you see, Woolworths is killing the snake, or at least cutting off its head, removing all sweets and chocolates from its impulse shelves in the checkout aisles. Although you’ll still be able to get your weekly fix of Will and Kate in the imported Hello.

Comment:

Those Woolies results then: group sales up 54.9% …wait, what?!!... oh, including the newly acquired David Jones. 12.0% without. Still including, operating profit was up 41.7% to R5.5billion, although margin was down a touch from 9.8% to 9.0%. And food is an interesting story: turnover up 13.5% to R22.3billion, with like-store growth up 6.6% against internal inflation of 7.7%, and operating profit margin up half a percent to 7.1%. Woolies are talking this up as a watershed year, with the Australian acquisition (and the consolidation of the Country Road stake) taking the Dapper One to the next level of geo-commercial scale (we totally made that up). Otherwise, business as usual for a retailer whose core market of better-heeled South African punters shows no sign of holding back on the posh steaks and aloe juice, even in these straitened times. For a slightly more detailed view of those results, have a look at what we said over here.

Comment: But of course if you were one of our loyal subscribers, you’d know all about this already.

Women’s Development Bank Investment Holdings (WDBIH) was formed to improve the lives of rural women and communities. Currently it has total assets of just north of R5billion, and has just forked over R500million for the purchase of Woolies shares, in something we savvy investors like to call a “bookbuild process”, by which chunks of shares are made available for a sort time with little or no marketing. This one was initiated by Woolies to help ease the cashing out of the BEE share scheme by a large number of its staff. The WBDH is owned by the WDB Trust whose trustees include the former CEO of the Group once known as Wooltru, Colin Hall, and – a bit of trivia for you – former first lady of SA and Trust founder Zanele Mbeki. 

Comment: So Woolworths finally reached rural women, eh. Only it didn’t sell them aloe juice or undies, but shares.

100% to Boycott, Divestment And Sanctions Against Israel (BDI) for persistence. 0.1% for relevance, which is also coincidentally the proportion of its product which Woolworths procures from Israel. And 0% for research which – again coincidentally  – is the proportion it sources from the Occupied Territories. BDI is clawing it way back into the news for taking on pop-saint Pharrell Williams, who as you know is partnering with the Dapper One in its ‘Are You With Us?’ campaign for sustainability. Pharrell will be  performing in September at a Woolies-sponsored event at the Grand West Casino in Cape Town; BDS has been refused rights to protest outside the event but promises to shut down all routes leading to the venue. 

Comment: BDS has a case to make and a following. But Woolworths is a more than questionable target here.

And while we’re talking trading updates, here come the usually restrained Woolworths with a brash and brassy 55% growth in revenue for the year to June. But hang about, before you get all excited and rush out to stock up on shares, that does include sales from the newly acquired David Jones stores Down Under. Not taking those into account, growth was a more muted 12%, a touch down from last year. This as tough conditions back home take a bite out of even the better-heeled punter’s disposable income. And speaking of better-heeled, most of Woolies staff beneficiaries of the BEE share scheme put into place eight years ago will end up R200,000 richer, give or take. So far, staff have cashed out to the tune of R1.9billion, with a total of R2.4billion in value having been created, and about R332million paid out in dividends. 

Comment: And that, Mr President, is what a good story looks like

According to an independent research study conducted by Wits University, the Boycott Divestment and Sanctions Campaign against Woolworths has cost The Dapper One some R7.8million over the past year. According to Woolies it has not, and growth has continued unimpeded. While last year’s renewed conflict in Gaza, which sparked the boycott, has made its inevitable way off the news cycle, recent controversies like the signing of Pharrell Williams as a spokes-icon for the brand have given the BDS cause further legs. The research itself was based on surveys conducted on the BDS website of 3,296 boycotters. 

Comment: It has to be at least possible that some of the boycotters questioned exaggerated just a teeny bit the amount they would have spent at Woolies had they not been boycotting…

A bit of confusion down under, where as you know our own dear Woolworths acquired a substantial chunk of poorly-named retailer David Jones, for its own good. Woolies has appointed one Pierre de Wet, ostensibly to overhaul David Jones’ flailing food business, adding cafés, restaurants and coffee shops to existing food halls and, according to DJ, reporting harmlessly through to its CEO Ian Nairn. Now it appears that Woolies has greater food ambitions in Aus, ambitions which may include standalone food stores, with de Wet reporting to Woolies’ CEO and part-time Audi-driving bodyguard Ian “The Transporter” Moir. These stores, like their counterparts in SA, would compete in the premium sector of the Aussie market, where Woolworths (a coincidentally-names Aussie retailer) has a trading brand called Thomas Dux, and where a premium grocer known as Jones the Grocer operates.

Comment: Bit of a shake-up there, then. Couldn't happen to a nicer continent.

Drably-named Aussie retailer David Jones appears to be taking a leaf out of parent-company Woolies’s playbook when it comes to ethical sourcing. According to CEO Ian Nairn (you’ll know him as Een Neen if you happen to be Australian), he was shaken by the collapse two years ago in Bangladesh of the Rana Plaza factory, where a DJ supplier sourced garments, and this has motivated him to launch an ethical sourcing programme and supplier code of conduct, which will eventually see all 1,600 brands in the chain becoming sustainable, environmentally friendly, and child and slave-labour free. And interestingly, he’s also inspired by suppliers who lead the way by example – Estée Lauder and L'Oréal, for example, but also a bunch of young Aussie designers who want to do the right thing. Currently, 12% of supplier brands had signed on, with no resistance.

Comment: It’s taken a long time, but the groundswell seems to be building for a movement towards a kinder, gentler and more sustainable capitalism. This is huge.

Jangly-wristed pop sprite Pharrell Williams has in a combination of serendipity, marketing genius and (no doubt) long, long moola, been appointed Style Director of Woolworths. According to Mr Moir, Pharrell is “a global icon for social cohesion, advancement through education and environmental awareness,” values which the Dapper One itself holds dear. And not only that, he knows a bit about the fashion business, too, with a couple of his own labels and collaborations with the likes of Adidas, luggage-label Moynat and G-Star Raw jeans under his quirkily-stylish belt. And he himself is excited by this deal with Woolies: “To have a corporation like Woolworths understand [the importance of environmental issues] and for them to have the kind of matching initiative in South Africa, in the middle of that precious gem of a continent... I have to be a part of that,” he says. 

Comment: It is to be fondly hoped that Woolies will now be making men’s shirts of a suitable length to wear untucked.

And in other Woolies’ news, the Dapper One has sacked five IT execs at newly-acquired David Jones, in preparation for that flailing Aussie retailer’s creaking infrastructure being replaced by something sleeker and more functional from the Beloved Country.

Comment:

Woolworths is one of those rare businesses that seems to prefer reality to its more candy-coated alternatives, and this explains why it is South Africa’s leading retailer – and one of our leading businesses – in the area of sustainability. For this reason, it engaged experts to measure how much water it used in its African operations, and has subsequently changed the way it approaches real estate across the continent, looking at the design of each property to ensure that it uses water efficiently. Its stores now include features such as water-saving air-conditioning, kitchens and rest-room facilities. Some properties collect rainwater, others recycle it, while Head Office, no less, has discovered its own underground river and has severed its ties with the municipal mains down in CT. Other measures include checking for leaks to bring the bills down – which in one instance resulted in a saving of 2.5million litres a month. 

Comment: Commendable stuff. The saving of water that is. And, obviously, the water itself.

Woolworths has beefed up the board of the Aussie outfit it used to acquire David Jones – Vela Investments – with some good, honest South African talent. The new appointees include corporate adviser Patrick Allaway, David Jones acting chief financial officer John McRae, Woolworths’ finance director Reeza Isaacs, and Woolworths’ chief operating officer Daniel Ngumeni. Vela was established just last March for the purposes of the transaction, but Woolies obviously have more in mind for it now. Perhaps, suggest some analysts a little unkindly, they have retained it for tax purposes. Sales at David Jones rose 2% for the six months to December, although they aim to grow sales over by at least $130 million in the next five years by upping sales of private label, selling more Country Road, increasing online sales, improving loyalty programs and consolidating sourcing and distribution systems with Country Road. 

Comment: Which is what we call a roadmap.

There’s nary a product in the world which Woolies wouldn’t love to rip the label off of and slap a big black W on. As the Aussies of David Jones are finding to their cost, or perhaps to their ultimate profit. The Dapper One, you see, is doing exactly what it said it would do and bringing the generic joys of private label to the Antipodean punter. Woolies will be introducing Studio W, RE: jeans and undies brand JT One to David Jones later this year, but kicking off with Country Road, Witchery, Mimco and Trenery somewhat sooner. Ultimate plans include a David Jones own brand of khaki shirts with their sleeves cut off, and hats with corks on for the flies. David Jones has always positioned itself as a “house of brands”, a strategy Woolies intend to pursue, while upping their own brand offering from its current 2.5% to 20% in five years.

Comment: Good on ya Woolies. It seems to work here, why not over there?

Oh and while we’re here, thought you’d want to know that Woolies’ first half turnover was up 55%. What? That can’t be right! It is? 55% FIFTY FIVE! PER CENT! Assisted, it must be admitted, by the acquisition of the Australianly-named retailer David Jones (or “Beeg Dive” as he’s known to hees mites), without which transaction, sales would have been up a more realistic but nevertheless respectable 12.5%. Breaking this down, SA sales were up 9.4% in clothing, 8.3% in GM and a really very pleasing 14% in food. Like store sales grew 8.2%, while retail space – including the rest of Africa – grew by 10.7%.  One area of concern is food sales in comparable stores, which grew just 8.2% compared with 11.8% last year. 

Comment: Still, excellent work in a watershed year for the Dapper One, which (boldly yet politely) announced its intention to take on the likes of H&M and Zara as a global retail power.

“I think it's going to be another very, very tough year for retailers,” – not us, Chris Gilmour, of Absa Wealth and Investment Management, no less, and he goes on to say that most retailers are “priced for perfection,” whatever that may mean, although (and he gets quite pointed here) Pick n Pay isn’t. While he concedes that the business under Mr Brasher is doing everything right, “clawing its way back is going to be an exceptionally long and difficult process.” SPAR, in the meantime, from their secret lair in the subtropical paradise of Pinetown, KZN, have announced diabolical plans to open not one but 35 new stores in the year we have no choice but to call 2015. They will also renovate 180 stores, and open 45 TOPSes, liquor being a growth industry now for oh, about 8,700 years. Shoprite, now – not much there except are they going to keep all those Wetherly’s open that they bought on the Ellerines fire sale? The Competition Comish approved the deal only on the grounds that no jobs would be lost. Something else that we might have missed in the flurry of last minute trading that was the holiday season was that Massmart are launching a click and collect service by which online Makro punters can buy their groceries online then pick them up from a sturdy locker conveniently located at a Sasol near you, rather than having to go through the mission of schlepping out to the nearest Makro in its windy acres of carpark. And from Woolworths? Not much, except a breezy two line press release, circa mid-December, to the effect that they’d had a productive meeting with BDS re the protests in Woolworths stores. On the wholesale front, some pretty exciting news, and close to home, also: Jad Perreira, CEO and founder of Voluntary trading group Unitrade Management Services will be speaking at the Trade Intelligence Independent Trade Forum, kicking off on 19 February in Jozi. If you haven’t got your tickets yet, there is one very compelling reason to do so.

Comment:

Whatever Woolies might be losing to the stubbornly ongoing action by the BDS campaign, the ANC Youth League and others, it isn’t R8million a month, as has been reported. The loss was alleged by a group known as the National Coalition for Palestine (NC4P), which arrived at the figure by gauging its own support on social media. The Dapper One disputes the figure, pointing to sales which are in fact growing, not diminishing. However, the persistence of the pro-Palestinian activists has to be a thorn in the side. Last week, the AGM was disrupted not just by placard-wielding protestors outside the building but by BDS members at the meeting itself, who have taken shareholder activism to a whole new level. On the upside for Woolworths, the High Court last week ruled that the activists would not be permitted under the law to protest inside stores. Among the Israeli products you’ll continue to find on Woolies shelves are figs, pretzels and pomegranates.

Comment: This prolonged and bitter standoff is beginning to resemble a certain historical conflict of our acquaintance…

Dead frogs in your salad? Dead bugs in your noodles? Certain special-interest shareholders supporting the boycott? Believe it or not, these are probably the stories on which Woolies would prefer we report this week. But being the responsible news organisation that we are, Tatler Inc. bring you the real dirt, to wit: The Dapper One’s share price is down on the news that domestic food sales grew 13% for the first 20 weeks of the FY, compared with 17% for a similar period last year, with clothing at 8.8% compared with 11%. This would suggest that Woolies’ immunity against the economic travails of the South African punter is beginning to wear off, or more accurately, that consumers at the upper end are starting at last to feel the pain. On the upside, while Woolies’ like-for-like growth in food has hit negative territory, they’re still outperforming the rest of the retailers. 

Comment: How about them frogs, bugs and Israeli avo’s, eh?

We are all apparently locavores, if you were to believe our retailers, and there’s no compelling reason we shouldn’t. Local produce accounts for about 90% of Pick n Pay’s fresh-food offer; at Woolies it’s about the same, while at Checkers it’s 99%. And this, according to PnP group executive of strategy and corporate affairs, is just how the punters like it. They want to buy local, while maintaining their demand for world-class produce. This, he says, is because they trust something when they know its provenance, and they believe that well-travelled lettuce is bad for the environment. Also, that when the proverbial rutabaga of civilisation hits the rapidly whirling fan blades of history and we’re all sharpening our sticks to fend off the hungry neighbours, an eat-local policy is more viable. South Africa is ahead of the curve in this particular: at 75%, our consumption of local produce beats that of the UK, at a scarily-low 60%. 

Comment: Food security is within our reach, and our retailers are showing the way.

Woolworths’ customers are a restless and demanding bunch. Or so The Dapper One would have us believe. Because they are constantly on the go, we are told, moving from somewhere important to somewhere more important, and this leads them inexorably toward a convenient Engen, where they stock up on Aloe smoothies before rushing off to their next appointment with the Great and the Good. Imagine their frustration, though, at not being able to pick up their well-deserved WRewards as they do. All that’s changing. Woolies are now extending the W programme to Foodstop punters, which we suppose, come to think of it, we could have told you in a line or two. 

Comment: Shrewd move by Mr Moir and the team though: the 3 million customers packing the W card, each one hand-ground from a block of solid carbon, typically spend 16% more than regular folk like you and me, and have bought 19% more things in Engen stores.

The Dapper One has sunk further roots into the arid strata of our neighbour to the left, opening its ninth store just a week or so back at a joint called The Grove in Windhoek. And the great thing about the latest addition is its scale: at 480 m2, it’s the Group’s biggest food market in Namibia. It also brings up to 250 the total of staff in country, and skills development has become a focus, as has the onboarding of local suppliers, although one assumes they’ll still be bringing in their paw paws and mangoes. Woolies are talking up the launch as part of their strategy to become the southern hemisphere’s global power of retailing. Currently, they have 64 stores in the region excluding SA, from Ghana in the north to Mauritius to the east. 

Comment: And aren’t we glad we picked up those shares when we did, eh.

By 2020, The Dapper One, which has taken the lead locally in sustainable seafood, will be sourcing all of its farmed seafood from aquaculture operations that are intent on improving themselves (a little vague, that one). WWF–SASSI greenlisted or, where applicable, ASC certified. This means you should be able to dig into your Chilean Salmon without concerning yourself overtly over the depredations which may have taken place to get it to your bone china plate, which will be nice. 

Comment:

Last week, or the week before, Mr Susman made one of his periodic pronouncements on the state of South African life, and was savaged in the press for Woolies’ own record of transformation. Cannily, the Dapper One chose to respond with an article – lucid, comprehensive, compelling – from Sam Ngumeni, who began his career at Woolies 13 years ago in the call centre, and is now Chief Operating Officer, ahem. What you would have to call both BB and B, not to mention EE. In the story, well worth a full read here, Mr N. points out that 75% of Woolies’ executive directors are black, and many have come up through the ranks. He points to their level 3 BBBEE status, a result, he says, of their vaunted Good Business Journey, gets into their supplier development programme, acknowledges the role of broader transformation in the rise of Woolies’ growing black customer base, and generally sticks it to the critics in the most affable manner possible.

Comment: It’s hard to fault Woolies on their strategic rise to dominance at the upper end of retail. Although that doesn’t stop a broad chorus of detractors from trying.

Until some smart-alec blogger proves that it was in fact only 37.5%, Woolies should be commended for cutting their energy use by 38% since 2004, during which time, it should be noted, they have grown turnover by 273%. All of this by the simple expedient of installing automated lighting in all of their stores. And savings to the tune of R270million have been achieved in the last four years alone – R222million by making its buildings energy efficient, R2million on water, R14million on a shift to electronic rather than paper customer accounts, R6million on recycled packaging – we could go on. It doesn’t stop even there: 3,000 tons per year of CO₂ are being saved through improved refrigeration technology on its trucks, and 15 of its stores now meet platinum green standards.

Comment: And all this without buying a single superannuated reactor from Vladimir Putin on the QT.

Woolies have announced an ambitious plan (soon to be eviscerated by some self-righteous blogger no doubt) to halve the number of products containing GMOs by mid-2015. One of the challenges – and one of the bases for Caroline Hurry’s argument in her TravelWrite blog – is that since South Africa doesn’t have any organic regulation, Woolworths cannot label any of its product organic. To which Woolies replied that Woolies launched its GM policy in 1999 and followed this up a year later by labelling all products which may contain GMOs, to enable concerned punters to make food choices with which they are comfortable. And also by jumping through self-imposed hoops to ensure that organic means organic – for e.g. in the case of chicken, where they source product from suppliers who either grow or import their own organic feed.

Comment: Woolies seems to have become something of a lightning rod for complaints about practices which in larger but perhaps less posh businesses are routinely ignored.

Woolies has launched a rights offer (something we’re pretty sure we covered in the inaugural Tatler all those years ago) to the tune of R10billion, which largesse it will use to pay down its bridging finance and loan for its R20billion purchase of David Jones in the Blasted Antipodes. Shareholders will have the option to buy additional Woolies’ stock or to turn the offer down. The market has begun to respond favourably to the acquisition, by which Woolworths hopes to become a southern hemisphere fashion giant along the lines of northerners H&M and Zara. One of the benefits of the deal for the Dapper One will be a whole new market for the private label brands it already owns, like as Studio W, JT One, and R.

Comment: No word as yet on a line of stylish but inexpensive bush hats with dangly corks.

You will be relieved to know that Woolworths might not have been the target of the pipe bombs which exploded in Cape Town last week, and that Boycott, Divestment, Sanctions (BDS), the non-profit wishing to bring these measures against Israel, was not involved. The first bomb exploded outside a motor dealership, the second outside a small business centre, and it was this one which damaged the nearby Woolies. Be this as it may, Woolworths has mentioned that it purchases less than 0.1% of stock from Israel, and will continue to do so. Various parties have pointed out that some of this at least comes from the West Bank or from Gaza. Meanwhile, CGCSA has defended the constitutional right of Woolies and others to free and fair trade.

Comment: Thorny. But we are of the view that clear and accurate labelling should allow consumers to make purchasing decisions according to their own ethical framework.

After the handsome set of numbers we reported on last week, The Dapper One is positioning itself more aggressively vis-à-vis the competition, ramping up the bargains and promotions and increasing the number of SKUs in order to convert all of those nit-picky basket shoppers into full-blooded trolley pushers.

Comment:

… Or so the saying goes. But there’s nothing like a good old-fashioned take over to really shake things up, now is there? So here’s a look-see at who is who in the David Jones / Country Rd / Woolworths zoo right about now:

- Paul Zahra, CEO of David Jones… resigns.

- His role is taken up by Iain Nairn, former CEO of Country Road.

- David Thomas, also from Country Road, will become the new COO at David Jones.

- While Witchery’s former boss, Matt Keogh, will become CEO of Country Road.

And as for the big chief himself, Mr Moir? He’s going to cut his time right down the middle between SA and Oz, while no doubt rubbing his hands together with glee.

Comment: None needed really, is there?

And in other Woolies’ news, the Dapper One announced that it has concluded terms to purchase the remaining 49% shareholding in its Zambian business. With four stores currently in Zambia, the move promises more stores there over the next couple years as well as an ever more consolidated foothold in our beloved continent.

Comment:

Down south, Woolies is inching – millimetering, even – towards the conclusion of its David Jones deal, holding all of the ordinary shares through its Vela Holdings investment vehicle, and delisting from the Australian stock exchange imminent. Meanwhile – and we think you’re going to like this – Aussie punters are none too pleased with the deal. Davy Jones, you see, has just posted its strongest sales growth in four years this last quarter, and the funds Down Under believe that a turnaround was heaving into sight. On the downside, it appears that David Jone’s electronics business – just recently farmed out to a subsidiary called Dick Smith – is heading yet further south, and we’re not talking about New Zealand here.

Comment: But in the name of all that is twinkly and new, who buys their iPhone 6 from a place called Dick Smith? It’s like buying one’s lingerie, if one did, from a shop called Errol McKenzie.

The Australian Foreign Investment Review Board (FIRB) has ruled that Woolies may proceed with its takeover of Country Road if it so desires. Which it does, Country Road being a lynchpin if that’s the word or even a cornerstone, in The Dapper One’s plan to build a southern retail behemoth with a supply chain and economies of scale to take on the biggest global players. And the ambition doesn’t end there: they’re also eager to continue growing their market share back home, chipping cheekily away at the plinths of Pick n Pay and Checkers. So where to from here? Woolies currently owns 87.92% of Country Road stock. They’ve made a formal offer to existing shareholders to snaffle up the rest for A$17 per, and once they hit the magical 90% spot, the remaining shareholders are required to capitulate.

Comment: The rise of Woolies might well be the story of the next ten years, as the growth of Shoprite has been in the last ten.

Shalom, and Assalamu alaikum to you. There: approximately 0.5% of this story and 0.75% of it are made in Israel and Palestine, respectively, now go ahead and burn your monitor down, whatever your views. Or never open a Tatler again, see if we care. This, readers, is an approximation of the position in which most of our major retailers find themselves, assailed for the support of one side or another by virtue of where they get their avocados or their hummus. While groups like Boycott, Divestment, Sanctions (BDS) are decrying Pick n Pay and Woolworths for their perceived support of Israel in these difficult days, Woolworths point out that less than 0.1% of their product is sourced from Palestine or Israel, with Pick n Pay suggesting similar numbers on their side. As both reasonably aver, all product is labelled with its country of origin and shoppers are free to make their choices, thus informed.

Comment: The conflict in the Middle East seems characterised by a deep and petrified cynicism on both sides, and this cynicism has found a home in the protesters back home.

The Dapper One has taken creditable third place in the inaugural (and execrably-named) ‘Online Retail SITEisfaction in SA Survey’; conducted by online marketing research company, Columinate, with 63 points, behind Kalahari (76) and Yuppiechef (71). In fourth and fifth were Takealot and Groupon, respectively. See what Woolies did there? The only non-online contender in the rankings, and even more impressive since 64% of online purchases are made up on wants like travel, music, and books rather than on needs such as groceries and clothes. When shopping online, Columinate found, punters were after things like “convenience” and “saving time and money.”

Comment: Nice one Woolies. We really should speak to our secretary about getting one of these internet thingies one day.

And in other news pertaining the inexplicable appetite of great South African businesses for naff and underperforming Antipodean retailers, the Federal Court of Australia have approved Woolworth’s takeover of David Jones. Australian approval, we believe, is something akin to military intelligence.

Comment:

96.8% of David Jones shareholders (including, presumably, the previously recalcitrant Solomon Lew) have approved the bid of Woolworths to take over the iconic Australian retailer, where by “iconic” the Australian press mean “floundering”. On June 24, Woolworths offered Cap’n Lew a swashbuckling A$17 each for his Country Road shares, which, it is believed, he had thrown in as a bargaining chip as he threatened to scupper the Davy Jones deal. An interesting aspect of the transaction has been that Woolworths’ share price has risen 10% since we began reporting on the bid in April, rather than declining as is wont to happen to the purchasing party’s stock when these big deals go down.

Comment: This might be because the acquisition positions The Dapper One within spitting distance of businesses like Zara, H&M and Top Shop as a flashy dealer in inexpensive fashions.

So right after Woolies made their “best and final offer” of $213million and $17 per share to buy out Country Road, the Australian Securities and Investments Commission (ASIC) has stated that the Dapper One should provide an independent valuation of Country Road due to concerns that  Cap’n Lew, or “Red Solomon”, as we have become fond of calling him, may benefit unfairly from selling Woolies his stake. “Despite having 17 years to do so, Woolworths did not decide to make the takeover offer until Mr Lew acquired a material stake in David Jones,” the regulator said, Unfair, they say, since other David Jones shareholders are not being “offered” similar benefits and that this really just seems to be all about a stalemate that had nothing to do with David Jones in the first place.

Comment: And so the soapy saga continues…

And just because we all need our weekly dose of dramatics, the plot thickens in the Lew vs Woolies saga, where the Dapper One has offered Country Road minority shareholders (including one Mr Solomon Lew) a whopping A$17 per share. To think that just seven months ago said shares were trading at $4.83 per. There is one teeny, tiny condition though… that the David Jones takeover is allowed to go through first. Whether Lew will accept the retailer’s offer remains a mystery and chances are we’ll have to wait a couple more weeks to find out when the David Jones shareholder vote takes place on 14 July.

Comment: And so we just hurry up and wait…

Cap’n Lew, or “Red Solomon” as he’s known to terrified aislefarers, is playing a canny game of cat and mouse with Woolworths among the shallow and dangerous shoals of retail acquisitions down under, to extend our metaphor dangerously past breaking point. Some of the wiser hands even suspect he has a cutting-out expedition planned for the dark for the moon on July 14, when shareholders will meet to decide on Woolworths’ bid for David Jones. See, if Woolies still hold over 90% of the shares on acquisition, they can compulsorily buy out remaining shareholders. Red Solomon currently holds 9.89% of stock, and no one knows whether he’s planning on extending this to the 15% he needs to scupper the deal, or indeed how.

Comment: Stirring stuff. Until July 15, we clutch our pearls.

Woolies are known as a well-intentioned bunch, the bleeding hearts if you like of the supply chain. They’re all about local and empowerment and sustainable and stuff like that. Why then does their African operation rely so heavily on food exports from South Africa? Currently, food stores comprise only 20% of Woolies’ footprint beyond the border, and this is a number they’re keen to edge northward. The issue is of course supply: Woolies is a business built on both quality and scale, and getting both of those to match up elsewhere in Africa is currently challenging. The answer, says Paula Disberry, The Dapper One’s group director for retail operations, lies in regionalism – getting infrastructure built on a regional basis the better to serve individual countries in the regions. All of this goes some way to explaining Woolies’ focus on the SADC region, as well as its recent withdrawal from Nigeria.

Comment: For as long as we can remember, we’ve been telling anyone who will listen that the businesses to invest on are those that bring supply chain infrastructure to an undeveloped continent.

More skulduggery on the high seas which wrack the blighted shores Down Under. It turns out – possibly – that “Red Solomon” Lew is not after a stake in David Jones at all. Well not for its own sake, anyway. Oho no. Cunning old Cap’n Lew is hoping to obtain an inconveniently large stake in Davey Jones so that in threatening to block the acquisition he might squeeze a better price out of Woolies for his Country Road shares. Red Solomon is reputedly asking for $16 Australian Doubloon per Country Road share – rather cheeky, since they’re currently going for $13.40 a head. Commodore Susman might have wished that he’d flogged them (the shares, that is) for the $5 Cap’n Lew was asking for those how many years ago. Nice for the smaller punter though – when the big boys are trading broadsides, the sharks enjoy a bloody harvest.

Comment: This is shaping up to be good, swashbuckling affair.

Just when Woolies thought their bid to acquire the piratically-named Aussie retailer David Jones was a done deal, well avast there, maties! Who be this, hoistin’ the black pennant and layin’ us aboard with his scurvy crew of deserters and blackguards? Why Cap’n Lew, or Red Solomon as he’s known in these waters, who scuppered Commodore Susman’s fleet back in the year seven. Aaarh…what? Oh yes, quite. Mr Lew, you see, denied Woolies the critical 11% of shares it would have taken for them to own Country Road outright by virtue of the fact that he’d snaffled them himself, and now he’s seeking to do the same with Davey Jones. At time of going to press, Cap’n Lew owned less than 1% of the Davey Jones shares. But he reckons there’s more value in them than Woolies is offering, and with a month before the go button gets pushed on the deal, he reckons he might get enough of the other minority shareholders on board to veto it, he with all his retail management experience and all.

Comment: All in the spirit of ongoing friendship between our two great nations...

Much has been made of Woolworth’s global ambitions as it moves to acquire the direly-named Aussie retailer David Jones, for $2.35billion. How do I get a slice of a deal like that? you ask. You may wish to speak to some of these good folk, all of whom shared a reported $37million in related fees:
Rothschilds (merger and financial advice): $11million
Standard Bank (advice and transaction sponsorship): $8m
Webber Wentzel (legal advice): $1.2m
Gilbert + Tobin (Australian “legal” advice): $584,000

Comment: And then, being on something of a tear, they pretty much blew the rest on accountants (Ernst and Young), PR (Brunswick and Hintons) and Tequila.

While back home Woolies has done very nicely from food, thank you very much, abroad their focus seems to be shifting to apparel. With their various acquisitions in the blasted Antipodes (the latest of which, David Jones, has just been given the nod by our very own Reserve Bank) their boldly-stated intention is to take on the likes of H&M and Zara, neither of which are known for locally-sourced kale, if you know what we mean. Case in point: their recent investment in a merchant academy to train buyers and designers, whose task it will be to cut lead times and turn Woolies into a quick-response fast-fashion outfit, whose bright young things will troll the world’s capitals with their smartphones and copy everything in sight.

Comment: Woolies has always been a classy outfit whose vaulting ambition may not have been as apparent in the past as it suddenly is…

Woolies have just become the first African retailer to win a Good Egg award from Compassion in World Farming (CWF), the leading global farm welfare charity. While in the EU battery farming has been outlawed for its cruelty, replaced by a system of “enriched cages” which allows chickens some freedom of movement, the barbaric system of raising birds is still alive and well in SA. Woolies committed ten years ago to sourcing all of its carton eggs from free-range suppliers, something no other retailers has yet done, but this accounts for only 50% of the 120million eggs they purchase annually. Of the eggs that are used as ingredients in its other food products, Woolies is sourcing 75% ethically right now, but aims to bring that up to 100% by 2018.

Comment: Woolworths have consistently showed that ethical decisions, while tricky to implement, are at a bare minimum consistent with good business.

The Australian foreign investment review body has approved Woolies’ US$2billion takeover of retailer David Jones, this removing a significant hurdle to acquisition, and the ultimate creation of a Southern Hemisphere retail leviathan. And perhaps, ultimate Super Rugby victory for the Sharks.

Comment:

Woolies would of course have had their reasons for investing in the 38 outlets, the A$600million property portfolio and the flat profit line of the venerable Aussie department store David Jones. And chief among these reasons is, it turns out, to allow the Dapper One to achieve the sort of scale that might one day put them in the top ten globally. Mr Moir believes that David Jones is a keeper, and is in fact in better shape than Country Road was when they bought that, but also that Woolies needs to achieve the sort of size in the south that Inditex and H&M have up north.

Comment:

Down in the blasted Antipodes, Woolies have mounted a successful takeover bid against the piratically-named David Jones, a struggling chain of department stores, which was involved in simultaneous discussions with Aussie retailer Myers, who, you will be pleased to know, lost out. The Aussies reckon this is a good thing. They like Woolies’ performance (20% growth per year over the last five years) and they like Ian Moir, who did such good things with Country Road down there and who is saying he could add A$130million to the David Jones bottom line within five years. The deal will enable Woolies to grow its fashion business in the Southern Hemisphere, taking advantage of seasonal commonalities, while bringing its tight handle on the supply chain to a business which seems to have lost its way. The deal is worth a reported A$2billion, to be raised via debt and equity in unspecified proportions.

Comment: And a great South African business does it again, this time with its largest and most ambitious acquisition ever.

So it has come to this. The Australians, not content with the frequent humiliations they deal to us on the field of play, now presume to advise us on how to dress. Or so we must surely believe as Aussie brands Mimco and Witchery – the former a retailer of knickknacks, gew gaws and accessories, the latter a high-end fashion shop – open in standalone and store-within-a-store locations under the Woolworths umbrella. According to Mr Moir, these brands will place the stamp of authority on Woolworths’ leadership of the local fashion scene. And in other Woolies news, The Dapper One is about to conduct South Africa’s first clothing sizes survey, and not before time.

Comment: Please: shirts that you can wear untucked and don’t reach your knees, which would be a first for SA. Or is that just us?

When the Dapper One embarked on its Good Business Journey these how many years ago, the back-row cynics at the CGCSA Conference may have dismissed it as mere window dressing before reaching surreptitiously for another chewy Sandton Convention Centre mint. Since then, Woolies have turned the Journey into a key pillar of profitability and a powerful force for responsible commerce in our industry. Now they’re bringing it properly to their suppliers, in a partnership with Californian tech crowd MetricStream, who are providing them with a Sustainability Performance Management Solution to capture and measure sustainability metrics and indicators around energy, water, soil, and waste management. This will enable them to register and bring suppliers on-board for the Journey, measuring compliance through periodic self-assessments and third-party audits, maintaining supplier data, and managing supplier certifications, across over 900 businesses worldwide.

Comment: Epic. The collection and more importantly, use of relevant data is one of the ways we’re going to win this thing.

And then there’s the Dapper One, who with a click of the heels and a shoot of the cuff, turned in as natty a set of interims as you could wish for, even as the larger chains flailed around seeking efficiencies and profits where they may. Turnover up 16% to R19.5billion for the six months to December, with profit up a blistering 22% from R1.3billion to R1.6billion. Going for the breakdown now: Food sales grew 15.3%, General Merchandise was up 6.9% and Clothing sales increased 10.1%. Heading south to the blasted Antipodes, sales at Country Road increased 27.5%. Ahead for Woolies: more massive next-generation emporia stores like their new flagship in Somerset West, and further expansion in size of existing small-format stores. Hardly a worry on the horizon, although the weakness on the rand could jack clothing prices up somewhat, and lead to diminished performance there.

Comment: Who wouldn’t want to be Woolies right now eh?

It’s My Big Book of Woolies this week, a bumper collection of stories for young readers who dream of growing up and owning their own white-collar grocery store one day. First off: The Dapper One has lured Puerto Rican supermodel Joan Smalls over to represent the re-launch of Studio W, their line of upscale kit for the well-turned-out boulevardier and his missus. Next: In another stride on the Good Business Journey, Woolies are about to embark on the installation of a 108kW photovoltaic power supply system at their Cape Town head office, working with preferred partner SOLA in a first for SA retailers. And finally, don’t worry about Woolies down in the hellish Antipodes – Country Road’s profits climbed a positively loony 72% year on year for the six months to December, following the acquisition of Witchery and Mimco in September.

Comment: So there you have it: a little something for everyone.

Another natty performance by The Dapper One which saw food sales increase by 15.3% and clothing sales by 10.7% for the six months to the end of December. This was back home. In the blasted Antipodes, where conditions are so grim that shopping is one of their few leisure pursuits, sales were up a whacking 30%. These interims owe much to Woolworths’ virtually uncontested position at the top of the market, which is showing more than its usual resilience during these difficult times. However, unfortunately, Woolies stock is staggering under the understandable weight of shareholder expectations, declining over 2% in a market which seemed to feel that they could have done just a little better.

Comment: Still, it’s a nice problem to have, isn’t it?

Perhaps not a big 1000th Supermarket milestone like Shoprite, but more than a baby step: Woolies has just opened its 50th Engen Foodstop, bringing relief and delight to those souls in Seapoint who find themselves inexplicably peckish in the wee small hours. And more are to come: 45 Foodstops will be opened between now and mid 2016, with turnover expected to grow in the format from R600m to over a billion. The acceleration of the Foodstop rollout is a tactic on the part of The Dapper One to establish footprint in areas where they are under-represented.

Comment: Unencumbered by its final recalcitrant franchisees, and possessed of a certain canniness when it comes to packaged meals and convenience as Woolies is, there is no reason this tactic should not pay off.

So Woolies is pulling out of Nigeria because of bribes and duties and Lagos traffic and hyenas on leads and what what. The Nigerians themselves have another story to tell of businesses which have not grasped the fundamentals of strategy in that admittedly confusing geography, and who haven't the patience to wait for the rich pickings which reveal themselves when you're prepare to put in the time. Of the importance of building a brand which might yet be confused with defunct UK retailers of the same name. Of stores whose austere yet tasteful design might send the wrong message about the value of the merchandise on the racks and shelves. Such parities also point out that Mr Price had its second-biggest opening day ever in Lagos, and that a Mr J. Wellwood Basson is busily raking in the green stuff hand over fist from a grateful and still under-stored populace.

Comment: Use it, don’t use it. We wouldn’t be surprised if The Dapper One returned to those chaotic climes in a couple year’s time, and would be oddly gratified if it did.

Woolies has announced somewhat precipitously that it’s planning on shutting down operations in Nigeria, as they are failing to deliver the profits that the Dapper One has come to regard as its birthright in recent years. Businesses like Woolies do not generally measure their performance in weeks and months but in years, but apparently conditions in Nigeria were so tricky – high rentals, prohibitive duties and a nightmarish supply chain – that a year’s trial was sufficient for them to cut their losses and move on. The two inaugural stores opened in Lagos just last March, and the Enugu branch in October. Woolies is not alone. Truworths, having opened four stores, have no plans for further expansion, while Massmart has complained of electricity shortages and the hideous price of hotel rooms.

Comment: Your loss, Nigeria. People want order, not chaos, and a business like Woolies is a harbinger of order and civility.

The internet is going absolutely wild this week over Woolies’ latest bit of alleged plagiarism, with some purse-lipped designer from Cape Town alleging on her blog, for all the world to see and then posting it on their Facebook wall, that The Dapper One ripped off her design for a hummingbird cushion cover, and didn’t give her the order she was hoping for. Every designy person in the country then liked and reposted the sorry tale, and Woolies, who like to position themselves in the social media space, ahem, had to get all explanative about it. Problem is, the hummingbird Woolies did use bore little resemblance to her hummingbird – which itself bore a troubling resemblance to an existing copyrighted photo.

Comment: Designers will rip off whatever they stumble upon, and will in turn be ripped off by buyers who like what they see but don’t necessarily want to fork out for it. Perhaps if everyone exercised a bit of originality in the first place, we wouldn’t be here, and yet here we are. Has anyone ever thought of doing a cushion cover featuring our very own greater double-collared sunbird, every bit as gorgeous as the hummingbird? Thank you Woolies, that’ll be R13.23 upfront and a risibly small percentage of the profits.

This is the sort of stuff we get off SENS so you don’t have to: “The board of Woolworths Holdings (“board”) wishes to advise that Lindiwe Bakoro will retire as Non-Executive Director from the board at the conclusion of the annual general meeting of the Company to be held on 26 November 2013. She will be taking up a significant executive role in industry and we wish her much success. During her four year tenure on the board Lindiwe was a member of the audit, risk and remuneration committees. The board wishes to thank Lindiwe for the significant contribution she has continuously made to our board and our business.” Yes well, congrats and all that but hardly the shot in the arm for empowerment the industry was looking for, is it?

Comment:

Not content, it seems, with snapping up by the barrow-load the hard-earned cash of the posher punter, Mr Susman has some ideas for making a success of the whole entire economy, or so he tells us in the latest issue of Woolies: The Annual Report. Jobs, he says. That’s what we need. He points out that Woolworths provides 23,000 or so of them on its own books, and is additionally providing a shot in the arm for the fiscus by sourcing 90% of its product locally, a fair old chunk of it through its enterprise development programme. Then there’s the small matter of the R1billion they pay annually in taxes. Problem is, he says, not everyone’s onboard. The government and the unions, he argues, seem to be in some unholy alliance intent on shutting the unemployed out of the workforce and investors out of the country.

Comment: And in a week like this one, who would argue with him?

We neglected last week to make any mention of the horrifying events at Kenya’s Westgate Mall, where three of our retailers – Mr Price, Truworths and Woolworths – have stores which were open during the terrorist attack. While Woolies report that no staff or shoppers were injured, they do say that some of their staff are having a hard time adjusting to the horror of what they experienced. But Westgate will not stand in the way of Woolies expansion into Kenya they say, where as you know they have recently rationalised their operation by entering into a franchise deal with local retailer Deacons, with which they had previously had a JV arrangement. Kenya is an attractive market for South Africa’s retailers, offering 5% GDP growth, over double the domestic rate.

Comment: A bold and rational approach in the face of terrifying violence. Nice one Woolies.

Can Woolworths do anything wrong? Not you, Pick n Pay, you answered the last time. Anyone? That’s right, the answer is in fact no. Proving that you can be both well-shod and tread the path of the righteous, the Dapper One has been listed for the third year in a row on the Dow Jones Sustainability Indices, along with 23 just other businesses globally in the food retail sector. The indices look at both the sustainability of the business and its potential value to investors, convincingly making the case that increasingly you can’t have one without the other. They also provide asset managers with reliable benchmarks by which to manage and presumably sell their sustainability portfolios. A feature of this year’s indices is the massive 31% increase in companies from developing markets.

Comment: Superb progress on the old Good Business Journey, that tastefully-clad adventurer.

Woolworths is thinking of joining Food Lover’s Market and discontinuing the stocking of crayfish as poaching and general over-use threatens the sustainable supply of this maritime resource. A commendable example which other retailers would do well to follow.

Comment:

Self-described Kenyan “lifestyle retail clothing firm” Deacons has revived its plans to list in the Nairobi Securities Exchange (NSE). This is relevant because Deacons has finalised its JV with a certain Woolworths of Mauritius to establish Woolworths Kenya Proprietary Ltd, for which Deacons will provide management support, transportation and other logistical services while Woolies in SA will provide the product, Woolies Mauritius being the vehicle for the operation of the Dapper One’s interests in other African countries. The road to joint ventureship, as you are well aware, seldom runs true, and so it proved in this instance – the listing of Deacons was delayed after a dispute with Woolworths over the franchise agreement, specifically those clauses relating to renewal rights.

Comment: But still, eh. Woolies’ strategy in Africa is clearly a more sophisticated affair than just pitching up, greasing a few palms and seeing how it goes.

What? Yes, of course we’re listening. All other business: depreciation of the printer/photocopier. No of course we weren’t buying artichokes or chinos on our tablet from www.woolworths.co.za with its sharp new heavy-on-the-black look and its now totally comprehensive product offering. Online is a growing business for Woolies you see, doubling every year, with most punters shopping for food and household goods. Traffic to the site from smartphones is up 38%, while tablets now account for 8% of all visits. With its responsive design, the site will offer the discerning shopper exactly the same experience no matter how they access it, with something called “integrated content” enabling them to shop by category, by recipe (not in the case of clothing, obviously), or even by trend. And speaking of which, online in 2011 accounted for R2.6millions worth of spend, with the trend indicating that it would account for 2.5% of GDP by 2016.

Comment: Creating a massive opportunity for those logistics businesses willing and able to step up to the plate.

Ah, Woolworths now. Woolies. Wooliekins. The Wooz. Woozaroni. El Woozamundo. Woo…where were we? Oh, yes. Sales up, wait for it, wait for it, 23% for the 53 weeks to the end of June, in the name of all that is dark and tasteful, according to the trading update. Why? you ask, although really you know. Obviously that extra week didn’t hurt. And Country Road sales grew 77.7% with the acquisition of Witchery down under. Locally, food has been a winner, growing 15.4% for the period with clothing lagging somewhat in the unseasonal warmth at 13.7%. In its drive for dominance in food at the upper end, The Dapper One has extended its ranges, expanded the number of SKUs on its shelves and in its fridges and begun to carry more branded lines, hoping with some success to upgrade its posh punters from baskets to trolleys.

Comment: Excellent stuff that well-heeled grocer.

Leading once again in issues environmental, Woolies has pledged to support the abolishment of “gestation crates” i.e. narrow metal stalls with bare floors which “house” pregnant sows in the intensive pork farming industry, a practice which, you might be interested to know, has already been banned in the UK, Sweden, Switzerland and some US states in favour of an open pen system providing sufficient space for the pretty, pink, pregnant pigs. The announcement is strongly supported by the NSPCA, which has been fighting to put an end to this injurious practice by 2016. The association, we are told, has also been in talks with other major retailers who have shown their support of the initiative. And in other feel-good Woolies’ news, the MySchool MyVillage MyPlanet programme which it so strongly supports was honoured as the “Best Corporate Social Responsibility Initiative Linked To Loyalty” at the recent International Loyalty Awards in London. But back to the piggies…

Comment: Good on you Woolies, for picking up on those farming wrongs that we scarcely knew existed.

Last week we reported that the Dapper One would be slashing prices by up to 30% in order to gain market share in the far eastern reaches of our great continent. “Not so,” cries Woolies, in what appears to have been a case of luckless misinterpretation of a Woolworths’ statement by our colleagues at the east African daily in which the report first appeared. “As we expand our African footprint, we are working hard to offer our customers in these new markets the best possible value for our unique quality,” says Woolies. “We’ve been able to reposition prices to offer our customers even better value for money,” and presumably to remain as competitive as possible. But alas no radical slashing of prices as we were all falsely led to believe.

Comment: …tut tut.

In East Africa, a region which for these purposes includes Kenya, Tanzania and Uganda, the Dapper One will be clenching its teeth, smoothing down its pencil moustache, knocking back the last of the gin and reducing clothing prices across the board by as much as 30% in order to win market share. This is not some desperate strategy they’ve pulled out of a nicely-turned hat, either: when they played a similar hand in Australia, profits jumped 70%. Woolies has to challenge the perception that its stores are only for the well-heeled, especially in Kenya, where it has mentioned that it intends quadrupling the number of its stores to 20 in the next five years.

Comment: But there’s the trick isn’t it? Make people feel posh for shopping with you and clever for getting those good prices

Woolies have just installed a solar roof system on one of its head office buildings in Cape Town, where they hope to harvest around 48,000 kWh of energy savings per year, with a reduction in emissions of about 49 metric tons. This is a big deal, although the saving, to put it in perspective, is the annual equivalent of the consumption of eight average households. And to be fair, the roof is not seen as a solution in and of itself, but part of a broader pilot The Dapper One is running to identify and understand the opportunities and challenges of introducing renewable energy sources across the business. But the Good Business Journey on which they have embarked is as much about commercial gain than bangles and dreadlocks: since 2004, Woolies has saved about R100million in energy costs, mainly through employee education and the installation of smart technologies. 

Comment: Visionary stuff, implemented by engineers and accountants. That’s the way to do it.

It is the aspiration of the Dapper One to possess the Soul of a Deli as they move more aggressively into supermarkets, we are told. Over the course of the next 18 months, Woolies will introduce over 2,000 new SKUs into the mix as they go after the better-heeled punter’s bigger shop. The strategy is also to open bigger stores: by 2014 they aim to have a third of their stores in the larger-format category; just two years ago, it was 10%. Bigger stores, apparently, send the signal to punters that they should push a trolley rather than lugging round a basket. Another signal that it is edging into Pick n Pay and even Checkers territory is the Daily Difference, a broadsheet available in store and in newspapers. But while they’re expanding their portfolio of brands, the core of the offering will remain the Woolies private label.

Comment: “It breaks my heart when I see a Pick n Pay trolley outside our store,” says Woolworths CEO Mr Moir, who is better known for driving his customised black A4 at breakneck speeds in exotic locales while being pursued by the Russian Mafia.

After the news we were saddened to report last week, we didn’t think much could cheer us up. But there’s this: we might have kangaroo in our biltong, but at least we don’t have frogs in our salad, like they do in Australia. Well, like one punter did, anyway in a bag of salad from what passes for a Woolies in that sad southern wasteland. You can imagine the Australian twitter jokes: “You might of (sic) croaked it.” and “Would you say that you’re ...........hopping mad?”. The wit.

Comment:

Woolies aren’t expecting miracles on The Dark Continent. But like other retailers, they are expecting growth, as the populations of the continent urbanise and grow their disposable income rather than their subsistence crops. And for The Dapper One, the model of choice is the corporate one and, at a push, JVs like the one they seem to be pursuing in Kenya via their Mauritian operation, rather than franchise: they’re currently in negotiations to buy back their stores from the franchisee of the Botswana, Namibia, Swaziland and Ghana territories. Among the challenges of doing business in Africa are its volatile currencies, its lack of retail space and that heady combo of corruption and red tape that gets the blood racing on a Monday morning. And then there’s the cold chain, the absence of which means that clothing accounts for 90% of sales in much of Africa. These challenges, Woolies believe, can best be met with a consolidated supply chain. 

Comment: Those classy white trucks with the nicely photographed broccoli on their sides and the rich, red earth of mother Africa in their tyres…

Speaking mainly in percentages, the Dapper One informed us a few weeks ago that the interims, when revealed in due course, would be something to see. They did not disappoint: turnover up 18.0% to R16.7billion for the six months to 23 December last, with profit up a positively whacking 20.8% to R1.8billion. Clothing and General Merchandise were up 23.6%, while Food was up 20.9%; Woolies is taking market share in both categories according to Mr Moir, with whom we are disinclined to argue. He also avers, if that’s the word, that his upper-crust punters are less affected by economic uncertainty and the credit squeeze coming into play at the lower end. And he is well chuffed with the promptitude with which Witchery has contributed to the profitability of the Group. 

Comment: If there were any doubts about the future of Woolies on the departure from day-to-day operations of Simon Sussman, they have probably been laid to rest.

Woolworths Mauritius, has just entered into a JV with Deacons Kenya Limited to open a Woolworths clothing chain on the mainland, in which Woolies Mauritius will own 51%. Which all seems to be a bit of an arm’s length way to do things, really. Curious. But a very tastefully-sleeved arm, obviously.

Comment:

The Dapper One is, we are told, intensifying its support for the little feller, with R4.3million in loans disbursed last year to smaller suppliers, who jointly also benefited from business opportunities to the tune of R157million. Through its enterprise development wing, Woolies now does the right thing by 40 small businesses, who jointly employ over 5,000 South Africans. In addition to market access, Woolies gives these businesses training that covers best practice in technical and business management skills and organisational development. A typical enterprise is the Greater Uitenhage Sewing Co-operative (Gusco) in Nelson Mandela Bay, which supplies Woolies with those classy reusable bags you’ve been meaning to put in the boot for ages. Gusco, which signed Woolworths up as its first customer, is an amalgamation of several informal community sewing groups.

Comment: This is the stuff which gets us out of bed in the morning. Nice one, that tastefully discreet Samaritan.

If it’s actual numbers you’re after, look elsewhere. But we have some pretty natty percentages for you, if that’s more to your discerning taste: Woolies’ group sales for the first six months of the FY we must call 13 were up 18%, with like store sales up 9.4% overall. Clothing was up 13%, with Food coming in at 11.1%. In the cursed Antipodes, however, sales were up a whacking 55.6% as The Dapper One’s Country Road subsidiary concluded its acquisition of the Witchery group, and these sales were included from September. Trading space, in the meantime, was up 5.7%. This didn’t prevent some punters, rattled by the shall we say more challenging prospects for retailers generally, from selling their shares, with the price dropping 4.3% last Tues.

Comment: Still. A tantalising glimpse of what to expect in the interims, out in a couple weeks’ time.

OK, normally we might consider it to be beneath us somewhat to report on the doings of a single-store outfit, but this time we’d be wrong. Durban’s Brett Latimer and Paul Beltramo have dropped 75 bar on opening a 2400m² super on The Bluff in Durban, and called it Oxford Freshmarket. The last time they started a business named after a posh English university, they sold it to Massmart for R500million. Woolies have entered into a partnership with Deacons, their one-time major franchisees in Kenya, to run their retailing operation there under the banner of a new business, Woolworths Kenya Proprietary limited, as a JV in which the Dapper One will hold a 51% stake. Choppies have launched their first South African hyper, a 3610m² whopper in Brits, Northwest. Game have increased their grocery allocation to 20% of retail space, with a long-term strategy to grow to 5000 line items in all its stores, and 85 Game Foodcos up and running by 2016.  Pick n Pay’s champion franchisees John and Peter Baladakis are opening a 3800m² concept store in Brentwood Park in the East Rand, and Shoprite are pretty much keeping on keeping on.

Comment:

Are we ready for a big Woolies? The success of the business and the quality of what it offers can’t really be called into question at this stage. But scale? Yes indeed if CEO Ian “The Transporter” Moir is to be believed. It is the conviction of Mr Moir that LSM 8–10 will enjoy growth in numbers of 5% over the next three years, with 92% of this being black consumers – among whom the Dapper One is enjoying unprecedented success, accounting as they do for 50% of clothing sales. The advantage of this strategic focus on the upper end, of course, is just how crowded it’s becoming on the middle of the market since the advent of Massmart as a serious player there. We’re inclined to take Mr M’s pronouncements seriously: under his stewardship, margin in food has risen from 3.6% to 5.8%, in clothing from 10.4% to 16.7%, and headline earnings per share have grown 142% in the last three years, two of those on his watch.

Comment: Woolies is fast becoming a textbook study in every area of business endeavour.

The Dapper One’s Good Business Journey has received a discreet but meaningful nod from the World Wide Fund for Nature (WWF) in the shape of a three-year broad-based, multifaceted partnership to drive greater sustainability through selected Woolworths products and operations. The partnership will pool significant resources, including technical expertise, research capabilities, industry insights and networks, with Woolies working with its suppliers on targets in its dairy, beef, seafood and textiles operations as well as furthering its carbon and water efficiency strategies. The two have already had some success in their collaborations on the sustainable agricultural programme, Farming for the Future, and WWF-SA’s sustainable fishing initiative (SASSI).

Comment: The partnership is a unique and timely pooling of the resources and goodwill of two sectors which are more frequently seen in opposition to each other.

20 weeks, what is that? A seemingly arbitrary period on which the Dapper One has chosen to report, that’s what. And with these numbers, who can blame them? Sales up 16% year on year, and comparable sales 9.9%. Sales in the benighted Antipodes up 36.9%, strewth, boosted by the acquisition of Witchery. Retail space grew 5.2% for the period, against expectations of 5.4% for the full year, which is impressive. Clothing sales, about which they are particularly happy, were up 13.7% here at home, while food sales grew by 11.2% with price movement of 7.3%‚ and like store sales up 7.8%. They anticipate more of the same with the interest rate down and consumers awash in easy credit and above-inflation wage increases, although depressed consumer confidence might play merry heck with things later.

Comment: I know, I know, let’s start a business aimed at people who have got money…

The nasty little war of attrition between Woolies and its franchisees in the canelands sputters on like a cheap candle. And right now, the big, tastefully attired guy is winning. The Cape High Court has found that Woolworths was indeed well within its rights not to renew the franchise agreement of one Haresh Ouderajh, who has been trading happily since 2003 at one of Woolies’ plum sites in the magnificently located but otherwise hideous Ballito Lifestyle Centre. Ouderajh also owns the store at the less tony Ballito Bay Mall, which caters to the more indolent holiday maker who can’t be bothered to drive the Discovery up the hill, and a more residential site in nearby Stanger. An embittered Ouderajh has accused Woolies of failing to deliver stock after he refused to sell the three businesses back to the Dapper One for their best offer of R40bar, an accusation Woolworths rebuts in no uncertain terms.

Comment: That whole franchise buy back has been a messy and protracted divorce in parts. Everyone wants the Merc, <em>and</em> the kids.

A week after Woolies hit these pages for being the only SA retailer on the Dow Sustainability Index, The Dapper One has been acknowledged with its third World Retail Congress Responsible Retailer of the Year Award in just five years, up there with co-winner Marks & Spencer (no relation) and narrowly pipping our very own Pick n Pay. Our Uncle Sydney, ever the analyst to call a spade an unslightly blemish on the bottom line, has pointed out that while Woolies and Pick n Pay had done “wonderful work” in the areas of environmental and social responsibility, this had not enabled them to grow market share, South African punters having other things on their mind, like how many kilos of GMO boerewors you can throw on the braai for ten ront.

Comment: There is a school of thought, however, that goes: energy, water and other costs are finding their way into prices on the shelf, and anything that addresses this situation is, in and of itself, a good thing. It is to this latter view that we subscribe, ahem.

And speaking of Woolworths, which we were, obliquely, in the previous story, in case you hadn’t noticed, they’ve opened up a store in the Game Mall in Oshakati, northern Namibia, which used to tremble to the roar of Buffel engines, another timely reminder of how far we’ve come in a scant couple of decades.

Comment:

Another retailer who deserves a bit of good news to follow a rocky patch, at least when it comes to the “social media”, is Woolworths, and by jiminy they’ve got it! They’re one of just five South African companies – and the only local retailer – to be listed on the Dow Jones sustainability index. Woolies, you may recall, embarked some years ago on something called a Good Business Journey, focusing on the six key areas of sustainable farming, water, energy, waste, social development and transformation and since 2008, they’ve managed to squirrel away more than R135million in savings. The current focus is on the life cycle of the products on their shelves, the impact of food production and the use of textiles, as areas with the biggest energy and water impacts in the value chain.

Comment: For more from Woolies on the Good Business Journey, make sure you don’t miss their session at the CGCSA Conference – what? You haven’t booked yet? Good grief.

Woolies has had a knack this year of bringing certain unpalatable truths about South African businesses to the surface. One was that everybody cribs from everybody else, and that the brave little businesses which don’t, crib from overseas. The next is that affirmative action continues to be both legal and widespread and a good way of redressing past imbalances. This latter truth so enraged white South Africans who had no intention of applying for a job at Woolworths that some of them responded to an opportunistic blogger who launched a consumer boycott against The Dapper One, while others wrote such nasty things on their Facebook wall that they were forced to take it down. Woolworths have taken the issue seriously, with Mr Moir, whom we have thoroughly enjoyed in the Transporter movies, issuing a statement to the effect that Woolworths does indeed employ white people but prefers not to in positions where other race groups are grossly under-represented.

Comment: Where the boycotters are currently getting their bottled artichokes or aloe and pomegranate juice escapes us.

Here is a sentence so priceless it deserves to be written down twice: “The Young Communist League of South Africa said they support Woolworths’ initiative and encouraged others to follow similar radical approach (sic) in order to redress the injustice of the past.”

Comment:

Woolworths are currently in discussion with the 3% of its store staff – 593 of them to be exact – who are not on a flexible working hours contract, with a view to getting them on board with the programme or putting them out to pasture. This, says the Dapper One, does not amount to a programme of retrenchment, although voluntary retrenchments and early retirements are being offered on generous terms. Woolies began putting its permanent staff on flexitime contracts in 2002; these contracts, we understand, date from the halcyon days before trading on Saturday afternoons, Sundays and public holidays. Woolies employ 18,000 people nationally, and from what we have seen in their recent results, are surely in a position to continue to do so without putting the wind up the shareholders.

Comment: This being both the upside and the downside of staying open 24, 7, baby, 365.

The Country Road takeover of Witchery dahnunder has turned into something of a knife fight for The Dapper One. You see, Solomon Lew, a man whose name is prefaced in the lazy shorthand of less imaginative publications with the words “Australian Retail Mogul,” suspects that a rights issue conceived to pay for the Witchery transaction is nothing less than a pitchfork to force him out of Country Road. Under the rights issue, he is being asked to pony up AU$11million or face the dilution of his Country Road shareholding to 8.2%, at which point Woolies could buy him out compulsorily. He believes that he has been given insufficient information on the rights issue. Nonsense, old bean, drawled Sir Woolies. It’s all there in black and white. Especially black.

Comment: If you won’t fork over $11million for a sure thing, you can’t really call yourself a mogul, can you?

Always on the lookout for a quality bit of double-worsted, The Dapper One has gone ahead with the rumoured purchase through its Country Road subsidiary of posh Aussie clothes shop Witchery, for 172 million Aussie dollars, somewhat shy of the AUD 500million original asking price. The seller, private equity gang Gresham, is majority owned by Wesfarmers, who also own the Coles grocery chain, and it is speculated that retail is more their thing than financial swashbucklery. Together, Country Road and Witchery will own around 520 stores with a combined business value of $700million, putting them in the number two slot of specialty retailers. A casualty of the deal has been Country Road CEO Howard Goldberg, who is handing over the reins to Witchery Boss Iain Nairn.

Comment: A bottle of Johnny Black to the best Iain Nairn limerick. A hint: in Australian you say it “Een Neen”.

Shoprite would be a pretty big player in online retail, if it was worth it. And they have the technology and capability to switch it on any time they like. But they believe that “few, if any” of those businesses offering online shopping are profitable. All this emerged in response to research by general internet busybody Arthur Goldstuck of World Wide Worx who believes that growth in online shopping is pretty much guaranteed for the rest of the decade, and that when Massmart come fully onstream they will offer stiff competition to Woolworths, Pick n Pay and whoever else may by then have decided that the water is worth having a toe in. He is also of the view that while Shoprite might believe that its mass-market shopper will not be interested in online shopping anytime soon, it is precisely in this demographic that internet use is starting to soar. The total spent on online retail in South Africa exceeded the R2billion mark for the first time in 2010 with growth maintaining at 30% in 2011, for a total of R2.636billion. Pick n Pay, who with Woolworths have pioneered online grocery retail here, have just announced that they’ve signed up with online payment service provider, PayU, which allows customers to store multiple credit card details for future purchases and speed through checkout. Goldstuck did mention, however, that food sales online are stagnant, with all the growth coming from durables.

Comment: No one will ever listen to their music off a little shiny disc.

Squeaking in under our publishing deadline is The Dapper One, who have the following to report:

• Group sales up 11.8% for the year to June
• Like store sales up 7.1%
• Clothing sales up 12.6%
• Food sales up 11.9%
• General merchandise up 7.0%
• Retail space up 3.6%
• Australian sales down 2.6%, strewth

Comment:

Turns out there is truth in the rumour that Woolies’ Country Road division is looking at acquiring the Witchery Group, another Australian fashion business with an understated line in gear and a classy black and white logo. Current owners Gresham Private Equity have been looking to unload Witchery since the year six, and with more urgency one imagines since failing to list it last year.

Comment:

As you will no doubt recall, revenue over at the dapper one was up 11.1% to R14.2bn in the half-year ended February and operating profit was 27.8% higher at R1.4bn. A small but significant chunk of this may be attributed to Woolies’ sustainability initiatives, which have saved the company R80million since 2007, and they’re looking to save a further R100mill by 2015. The biggest saving has been in the area of energy use, where Woolies has managed an almost 23% reduction in relative energy use from their 2004 benchmark – and this despite energy price increases of between 16% and 25% per annum. This is highly commendable for both the bottom line and the environment. But the humbling part, speaking of the dear old environment, is that the environmental costs of doing business are currently doubling every 14 years.

Comment: Still, every bit counts, especially in these days of post-Rio ennui and dread.

The recently updated Pick n Pay online shopping site demonstrates in crisp, bright colours just how seriously the Big Blue takes both online retail and its Smart Shopper loyalty programme, with each featured special tagged with the number of extra points you’ll get, and the whole thing resembling some super-fun, extra-vibey grocery themed variant of the noble game of Scrabble, with loads more triple word score squares. And it’s not just about points back and appearances: they have also streamlined their delivery processes. This in response to received and anticipated growth in a market which, while starting from a low base, is looking good: 8.5 million South Africans use the internet, 75% of those actively use e-commerce, and 4.5 million are banging their little faces up against the red hot chainlinks of the devil’s playground that is Facebook.

Comment: Delivery is of course where the pedal of consumer demand hits the metal of profitability for aspiring online retailers.

A firm handshake, a steady gaze, a respectable batting average and now this: The Dapper One has had its reputation for reputationliness affirmed by no less a body than the Reputation Institute in their 2012 RepTrak Pulse survey. Woolies came top in the survey, conducted among SA’s top 20 listed businesses, with 78-odd points, giving MTN a 10-point pasting into second, while Clicks was the only other retailer in the top ten, at sixth. Lovers of gimmicky beverages cribbed from overseas markets will no doubt be less than charmed to find that the Frankie’s contretemps (we’re allowed to use French; it’s a Woolies story) didn’t have any effect on Woolworths’ reputation, which may or may not have had something to do with the frictionless damage control which whirred into action when the scandal went down. New CEO Ian Moir came out particularly well in the survey, conducted among 1,300 South Africans from LSM 6 upwards, who described him as well-respected and having a positive influence on the company.

Comment: Interestingly, the overall results for the top twenty were down, indicating a general decline in the trust between SA consumers and the businesses who serve them.

No, really. In order to differentiate Taste Magazine from all the other glossy temptations lining the snake down at your local Woolies, they’ve gone and made this month’s cover cinnamon-scented. This is what in magazine publishing terms is known as “a revolution”, and might in unkinder quarters be known as “a gimmick”.

Comment:

Woolworths, having dealt with the fake old-school ginger beer thing and breathing a sigh of understated, gentlemanly relief has been blindsided by a new scandal of, well biblical proportions: its hot cross buns are halaal! They’ve been personally blessed by the ghost of Osama Bin Laden and are unfit for Christian consumption, according to the crazier reaches of the twitterverse. What with this and the threat by the 250,000-strong hunting community (their figures) to “deal with” Pick n Pay, it’s an interesting time to be in retail right now.

Comment:

Up north, Woolies have intrepidly entered a JV with Nigerian conglomerate Chellarams and is storming that bastille of promise, Africa’s biggest consumer market, with plans to open 30 stores in the near future. Their inaugural store opened in Ikeja, north of Lagos last week, and another opens at The Palms in Lagos, pioneered by Shoprite and Massmart, this week. These two will cost the Dapper One and co-financier EcoBank a cool one and half million US each. Woolies now has presence in 13 African countries and is apparently eager to compete on both quality and price to serve Nigerians – acknowledging “infrastructural issues” along the way.

Comment: So they’ve gone and done it. Good luck with the dark suits up there, Woolies.

Fitness Magazine has reported sales of, on average, 19% higher for the fourth quarter of 2011 year-on-year, a fact it attributes to its decision to go into 30 top Woolworths stores, where the posher readership it prefers is to be found.

Comment:

Hold onto your hard drive, we’re going to get a little technical here. Woolies are upgrading their IT systems and strategies, and have gone with long-time partner JDA who are assisting them with a bunch of systems, and we quote, which are aimed at helping to “increase demand visibility across the entire trading network, identify consumer preferences, and optimise assortment, merchandising and pricing processes with the aim of improving sales and customer satisfaction”, specifically across the food business. The implementation will take place over the next three years, and includes solutions for demand, fulfilment, channel clustering, assortment optimisation, planogram generation, shelf price optimisation, promotion optimisation and markdown optimisation.

Comment: Oh, come on. That wasn’t so bad.

Can’t remember if we mentioned this, but sales over at The Dapper One were up 11% to R14.2 billion for the first half of the financial year, with food up 12% and clothing and GM up 10%, as you would know if you had idly trolled through your SENS announcements last week. Net income, which strikes us as an oblique way of saying operating profit, correct us if we’re wrong, hit the R1.03 beellion mark in the six months to Boxing Day, a monstrous 33% up from R775 million just a year ago. 2012 is going to be a biggie for The Dapper One: they open their first of ten full line supermarkets on the 26^th of April on William Nicol, in order to alleviate the “heartbreak” CEO Ian Moir describes at watching competitors sell trolley loads while he flogs tasteful black basketsful.

Comment: With the arrival of Mr Moir – and the Frankie’s debacle aside – we detect a slightly more streetwise vibe at Woolies, in keeping with the demands of the, shall we say, robust competitive environment.

Say what you like about accountants, they’re not boring. Oh, wait, that’s marine biologists we’re thinking of, and firemen. But when accountants name a survey, they do it with a certain je ne sais quoi. Thus the Deloitte Global Powers of Retailing Survey, in which our big boys have done rather well this year: Shoprite in 92nd position globally, up from 95th last year, and still the biggest in Africa and the ME. Massmart coming strongly in at 126th globally and second in Africa, and Pick n Pay at number 133 and third respectively – having once been the indisputable biggest retailer in the RS of A. SPAR a handsome 179th and 4th, with Woolies in a suitably muted but pleasingly symmetrical 222nd. Africa was the world’s fastest growing region, with 15.4% growth compared with Latin America’s 14.8%, which augurs well for the future.

Comment: Take that, Captain Ackerman! Kerpow!

Now that the ASA has found against Woolies on the grounds of plagiarism, it’s time for some opportunistic breast beating. In the past couple of weeks, we have run some typically dry column inches about the Frankies saga, suggesting perhaps unfairly that Frankies was being a little oversensitive and pointing out that stealing ideas from other markets was accepted practice among South African businesses. Someone who has more commendably taken up cudgels on behalf of the little guy, however, is Moneyweb’s Alec Hogg, who has made something of a crusade of the issue, reporting inter alia on conversations reputedly held between Woolworths and Chill Beverages, the supplier who made their own-label vintage soft drinks.

Comment: We still have our reservations about how Frankies is handling it all, though. They seem to be becoming professional victims rather than custodians of a national brand built on more positive values.

Did we mention that there were some trading updates in the offing? Woolies now, delivered in measured tones in an expensively-carpeted room at a discreet boutique hotel we think you’re familiar with. Sales for the 26 weeks to Christmas Day up 11.4%, or 8.4% on a like-store basis. Interestingly, clothing and food were one a par for once, with clothing up 11.2% and food up 11.7%. GM is still lagging somewhat, growing only 6.2%, with much of that happening in the run-up towards Christmas. Woolies’ performance and general outlook saw earnings and headline earnings per share up a record 30-35% for the same period. On the downside, the Australian Country Road division remains a bit of a blighter, with sales down 2.8%. The franchise buyback is cracking on nicely though, with 50 stores now converted, 8 still to come and 17 which will remain in the hands of eager franchisees.

Comment: We hope you bought some Woolies back when we told you to...

Surprise, surprise, but as we kind of predicted last week, Frankies Old Fashioned Beverages’ very public complaint to the ASA that Woolies is muscling in on its whole original branding thing has paid off with a boost in sales for the month of December. For our part, we believe that Julia Donaldson’s children’s classic “The Gruffalo” bears a suspicious resemblance to our own 2006 sleeper hit* “Uncle James and the Delicious Monster.”

*It’s still sleeping

Comment:

Our grandson – the clever one, you remember, at Stellenbosch, with the fancy computer – tells us that Woolworths have just launched what is known as an f-commerce application on the Facebook. Woolies already have over 143,000 fans on their Facebook page, and now they’ve actually got something to do there, viz. buy stuff. Reading between the lines, it appears that what you can currently shop for are mainly items of homeware and clothing, but food is soon to follow. Historically, Woolies fans have been able to share their recommendations or “likes” with family and friends. F-commerce takes things to the next level, plugging into their online id and marketing directly to them while they should be doing an honest day’s work.

Comment: There is a whole new generation of shoppers, it seems, for whom being understood is far more important than that quaint outmoded notion we used to call privacy. And Facebook is where you will find them.

In what may just be a canny bit of marketing, local beverage heroes Frankies Olde Softdrink Company are very publicly taking on Woolworths at the ASA for bringing out a range of fizzy drinkie winks that are slightly similar to Frankie’s own range, in that they are old fashioned in provenance and branding. The Dapper One is of course denying this, and to be fair vintage sodas with twee labels have been all over the show since the early nineties in the markets where businesses like Woolworths and indeed Frankies take their, ahem, inspiration. It’s unclear what Frankies have to lose, except to the customer who is saying to themselves: “What I feel like right now is an ice cold vintage soda, sort of thing that Frankies do, only here I am in Woolworths … but wait! What’s this?” etc.

Comment: In fairness, the two ranges do bear a passing resemblance, in the same way that neighbouring shops on the Midlands Meander selling bric-a-brac and scented candles do.

Among the more than usually hallowed airconditioning ducts and gleaming rails of the refurbished Virgin Active in Constantia, Woolworths have opened their inaugural W café, a pilot store. For Virgin the synergies between the businesses revolve around their shared position on quality and their heritage as proudly South African businesses, as well as their need to offer a superior experience to their buff and picky punters. The usually not quite as pithy Zyda Rylands, MD of Woolworths Food, observed drily that the dapper one believes “there's a good fit between the brands, both focusing on helping South Africans to live a healthier lifestyle.” Fit, gettit?

Comment: Job at Accenture? Check. Virgin Active membership? Check. Woolies Cappuccino? Check.

Woolies apparently have the reputation around the “industry” of being a tricky client to work with. Don’t ask us, ask them. Because that’s what they told the Jupiter Drawing Room when they sacked that august agency two days ago, with no warning and two months’ notice: “You’ve done great work, you’ve managed us well as a client with a reputation for being difficult, but we’re taking it all in-house.” The reason Woolies gave for this is in a nutshell cost-cutting in anticipation of a devilishly tricky 2012 as the fallout from the Eurozone crisis rages on. JDR in the meantime, are looking at letting more than 20 staff go, and have graciously waived aspects of their restraint agreement with Woolies in the hopes that some of those unfortunates will be re-employed by the Dapper One.

Comment: Of course, bringing an agency in-house is not without its own costs. For example, you have to employ an expert cat-herder, and they don’t come cheap.

AGM time over at the Fine Emporium, where Woolies took the opportunity to announce sales up 10.3% for the 20 weeks of the FY we like to call 12, with like store sales up 7%. This against figures of 10.7% and 6.9% for the same period last year, respectively. Like other retailers, it is taking a dimmer view of the rest of the year, but still continues to expand like a large and impeccably-suited buffalo into the rest of Africa, with three stores in Nigeria being opened with joint venture Chellarams Plc, and one Ugandan and three Tanzanian shops already trading. The election of Mr Susman as non-independent Chairman encountered if not a headwind then a stiffish breeze in the form of 15.8% of shareholders who felt he was a little close to things still to be as lofty and patrician as the role demands.

Comment: C’mon, gents. This is Mr Susman we’re talking about.

The Dapper One has hit a recent double whammy (if that’s what you do with them, games never having been our big thing at school) in the area of good behaviour, joining just four other South African businesses (including Sasol, Bidvest and Nedbank) on the Dow Jones Sustainability Index, and being identified in a World Economic Forum (WEF) report as a sustainability champion in the developing world. The WEF assessed over a thousand businesses on criteria which included sustainability, innovation and scalability, with only 16 making the cut. Woolworths through its Good Business Journey has embedded sustainable practice in the heart of its strategy, with initiatives such as Farming for the Future, its energy and water efficiency programmes and the development of small-scale suppliers in order, they say, to create shared value for stakeholders.

Comment: Jolly good show, governor.

More on Woolies’ bullish pronouncements on this great continent we call home. You will recall that The Dapper One is pulling back from franchise in order to enter joint ventures with selected partners in Africa. One such is a Mr Ali Mufuruki, himself a one-time franchisee, who will be partnering with them on an existing 4 stores – 3 in Tanzania and 1 in Uganda – and they are together opening another 3 in the next couple of months. Africa currently represents around 3% of turnover, but growth is likely to be rapid – another 16 stores this year, with an increase of 42% of retail space on the continent, where a boom in consumer spending accounts for 60% of GDP, and a planned total of 145% over the next 3 years, for an investment, Woolies estimate, of R130million in a strategy they describe as “low risk, high return”.

Comment: And which we describe as “nice work if you can get it”.

Flushed with the successful but acrimonious buyback of its South African franchise operations for a total of around R600bar and a return thus far of R450million in additional retail margin, The Dapper One has donned its pith helmet and is looking to achieve something similar elsewhere on the continent, where it has 40-odd stores, in geographies (ahem) like Kenya, Botswana and Zambia. The idea is to run these businesses as JVs, with Woolies owning at least 51% of each store, and putting its stamp more markedly on the continent as a coherent and efficiently-managed brand. What it emphatically will not be doing, however, is attempting to wrest back control of any of its Engen Food Stops, and will in fact be rolling out more of these little late-night emporia for curiously hungry youngsters this year.

Comment: Is that the flash of a stiletto in the black silk Woolies glove?

Oh I say – turnover up 9.4%, don’t you know, and profit before tax a buoyant 31.1% to R2.3billion over at Woolworths, what? Jolly good! Things have been rattling along at a clipping pace at SA’s poshest retailer, with clothing and footwear up 11.5% and food up 10.7%, and general merchandise the only fly in the ointment at minus 2.7%. Margin on food improved from 3.8% to 4.8%, mainly due to improved sourcing. But the real winner was financial services – their JV on the credit side with ABSA saw operating profit up a monstrous 82.3% Y on Y, with a big improvement in the quality of the debt also. A significant change in the management of the business is the retirement of Buddy Hawton as chairman, and his replacement by a Mr Simon Susman, who due to his recent involvement with the business will be classified as a non-independent Chairman.

Comment: Leather on willow, a boyish toss of the forelock, aren’t the daffodils glorious this year etc.

In all the excitement last week … what? Oh, there’s always some excitement, of one form or another ... we completely and utterly neglected to report on the tempting item of newsicles that is the Sunday Times Top Brands Survey. So here, in order of meritocratic merit, is a relatively random sampling of categories:

Comment: Nice one, Unilever and Pick n Pay. And Shoprite.

The dapper one has teamed up with a crew of Venda farmers whose avo plucking season starts several weeks earlier than the rest of the country due to favourable climatic conditions, to provide South African avocados in Woolies stores for longer, reducing the retailer’s dependence on pricy avocados from Spain.

Comment:

Intrepid gentleman adventurer Sir Rodney Woolworth has discovered a mysterious underground river under the eponymous retailer’s Cape Town Head Office, which the firm is now using to flush the bogs, wash the roller, power the fountain that plays delicately at the end of the gravel drive leading up to the marble steps, and cool the air, saving the Mother City a refreshing 27,375,000 litres of water a year. As yet, no one has discerned whence this intriguing aquifer springs.

Comment:

With a carefree toss of its boyish locks, Woolies has issued a rather cheerful little trading update for the year to the end of June, with Group sales up 9.4%, like store sales up 6.3%, clothing sales up 11.5%, food 10.7% and 8.4% in comparable stores, and trading space up a pleasing 7.6%. The only weevil in the biscuit, wouldn’t you know it, is Australia, where sales at Country Road fell 2%, or 10.9% on a comparable store basis. A possible reason for this, suggests one gimlet-eyed analyst, is a leadership vacuum left by the departure of Ian Moir for these greener, more pleasant shores. In South Africa, reckons the same young blade, the pleasing result stems from the resurgence of the posher punter and her increasing freedom from debt now that she’s downgraded to an A-Class.

Comment: The recent uptick in food inflation, always a welcome guest for retailers, can’t hurt either.

Woolies has recently splashed out R25.4million on a bunch of its own shares in order to give them back to four hardworking people who have really made a difference, viz finance director Norman Thomson who received shares valued at R3.15 million, Zyda Rylands, managing director of the food unit, who was awarded stock worth 9.35 million rand, company secretary Cherrie Lowe who got shares worth 2.22 million rand, and Mr Susman himself, who was granted stock worth 10.73 million rand. The stock was granted under a three-year performance agreement, the conditions of which were fulfilled by all the executives in question. Susman sold shares worth 4.31 million rand on the same day they were acquired by the company, while Thomson sold stock for 1.26 million rand and Lowe disposed of shares valued at 893,431 rand.

Comment: A tasteful gift, of the sort you would expect from The Dapper One.

As part of its good business journey, the Dapper One is sending some entrepreneurs on journeys of their own. Take Mr Goodenough Ngcobo, for instance. Latterly an employee of Woolies in Pinetown, he now owns a small but growing fleet of vehicles which deliver used pallets from Woolies to the provider down in Isipingo – a business funded in part by Woolworths itself. And Mr Graham van Rooyen, once a shuttle driver ferrying Woolworths folk to their far-flung parking bays, now the owner manager of Ikhozi Shuttle & Tours, a thriving Western Cape business, the expansion of which Woolworths has recently enabled with a loan. Development of black-owned enterprise within the supplier base is integral to Woolies’ sustainability initiatives.

Comment: A blueprint for big business eager to embark on some meaningful job creation.

If you want loyalty, as the old saying goes, get a loyalty programme. Or a Labrador. The former of which is what the Dapper One did some time ago and boy has it worked, with loyal shoppers growing food sales 11.8% for the 26 weeks to December, with like-store sales up 9% and something they’re calling return on sales up 3.8% to 5.3%. But back to that loyalty programme: the card-based scheme, which offers discounts to the posher punter and rewards them for shopping across the Woolies clothing brands, had achieved its 9-month target in a scant 13 weeks, which points, says CEO Ian Moir, to customers who have a sense of ownership in the business. Better procurement has played its part in the achievement of superior margins, and as normally hard-bitten analysts have pointed out, Woolies was the first to get hit by the downturn, but has proved itself swifter to recovery also.

Comment: Woolies shoppers eh. They think they own the place.

The dapper one, still at the forefront of meaningfully sustainable initiatives, has joined the Roundtable on Sustainable Palm Oil (RSPO), a commitment which includes purchasing only certified palm oil used by the ton in its food and beauty products. This will encourage Malaysian and Indonesian farmers to grow oil palms sustainably on degraded agricultural land rather than hacking down virgin forest for plantations, and destroying the habitat of the endangered orangutan.

Comment: One day, we will have to break the news to our children that there are no more orangutans, because we needed cheap palm oil more. Or we could go the Woolies route on this one, rather.

Woolworths has challenged cheesemakers to come up some exciting new cheeses, cheeses which will really stand up and get noticed rather than lying exhaustedly about on a chopping board at the tail end of a long Saturday lunch. This in the inaugural Cheese Makers Challenge. We’re thinking of entering our locally notorious Bolivian Death Squad in the semi-hard cheese category.

Comment:

The Dapper One lifted turnover to the tune of 9.8% for the 26 weeks to December last year, on the back of a strong performance in the clothing division, where they are furiously punting posh Aussie brands Country Road and Trenery, and where sales grew 11.5%. How have they done it? Salary increases at the upper end apparently, and a generally buoyant environment towards the end of the year, when retails sales lifted surprisingly – see our Trade Environment section below. Interestingly, the Country Road division in Aus was a drag on results rather than otherwise, with one analyst remarking kindly that Aus as a retail environment remained tough as a drover’s trouser seat.

Comment: And there we were thinking a trenery was the shovel strapped by a swagman onto his tucker bag...

Oh what the heck, seeing as irresponsible transactionary speculation is rife in these uncertain times, let’s indulge in a little ourselves. Is there any significance in the appointment of ex Marks and Sparks boss Stuart Rose as a non-exec on the Woolies board? Apart, obviously, from the close philosophical and family alignment between those two great businesses.

Comment:

According to certain gimlet-eyed analysts over at Investec, South African retail shares have had it way too good for this how long, and it’s time for a cold cup of reality. Investec disparages the argument that South African retailers offer value simply because they trade at lower PEs than their emerging market peers, and that this value will offer little protection when the free money currently finding its way to these shores becomes a little more rational in its quest for returns. Another analyst, lurking behind a veil of anonymity, has fingered Woolies and Pick n Pay as being a touch on the pricey side, the former because of its local clothing strategy, and the latter because of its sticky exit from Aus.

Comment: How did we do there? Did we sound like we knew what we were on about?

Simon Susman is experiencing an awkward exit from the role of CEO at Woolies. First the foreign exchange allegations from embittered ex-Country Road MD John Cheston. Then sarcy suggestions at the AGM from professional bloody nuisance Theo Botha that his ascendance to the position of Chairman might be contrary to the spirit of King III, as he could exert undue influence over incoming CEO Ian Moir. Mr Susman in the meantime has taken over the reins as deputy chair – a custom-built position – with immediate effect. Moir, in the meantime, has said that he will be leading the business into the further reaches of cyber-retail, and into the earthier extremes of the African continent, where, he says, it’s important to take the long view.

Please note: this story originally referred to “the Reserve bank’s intention to pursue the matter” of possible foreign-exchange violations by Mr Susman. In fact, the Reserve Bank has made no such intentions clear; rather it has said that generally speaking it would pursue contraventions of the provisions of Exchange Control Regulations.

Comment: Chin up, Mr S. Or should we say “Number 2.”

Some months ago, we reported that Country Road, Woolies’ posh Aussie clothing outfit, had parted company with its recently-appointed CEO, John Cheston, over irreconcilable differences in the strategic direction of the business. Cheston has come back blazing, with some pretty wild allegations, viz that Country Road overstated its cash position before he joined, that outgoing CEO Ian Moir pocketed a handsome but unagreed and results-wise unearned bonus on his departure, and that Country Road’s company secretary had been instructed to repatriate funds from SA to Aus for the benefit of Mr Susman himself. According to Susman, these funds were purely for his travelling purposes, although the procedure followed may not have been correct. As to the rest, says Woolies, see you in court.

Comment: Ugly stuff, although the swift sacking of Mr Cheston suggests to some analysts that the Dapper One is refreshingly, shall we say, single-minded when it comes to threats to its strategic direction.

The Sunday Times loves nothing better than to tot things up and then publish supplements jam-packed full of the results. The Top Ten Teapots Survey. The Best Hair in Advertising Report. And, of course, the Top Companies Survey, in which it reveals, in all its naked glory, and neatly ordered, the growth you could expect had you invested in this business or that. Our retailers do surprising well, with all of the big boys represented, as follows:

Shoprite (3); Clicks (5); Spar (18); Massmart (24); Woolworths (37) and Pick n Pay (94).

Had you decided to invest in manufacturing businesses, however, you would have had to do a little more homework. Of the hundreds of businesses available in FMCG, only 8 made the grade:

Illovo (31); Aspen (33); Oceana (38); Rainbow(64); Tongaat-Hulett (74); Astral Foods (76); Tiger Brands (77); SABMiller (81)

Comment: Salient here is that of the suppliers who made the grade, two are from the volatile sugar industry (although one of the two also does golf estates), and two from the embattled poultry sector.

Woolies have very cleverly introduced SA’s first recycled plastic sandwich containers, using post-consumer recycled plastic (rPET) which comes primarily from locally collected soft drink and water bottles and is scrupulously ‘super cleaned’ by the local supplier, who has invested some R20 million in a food grade recycling plant. The resulting plastic meets or exceeds international standards for food safety.

Comment:

The Posh One is taking an increasingly robust position on Africa, announcing last week that it would be looking to enter former hellhole Angola in the near future. Outgoing (in at least one sense of the word) CEO Mr Susman believes that Africa provides great opportunities for growth in the next 5-10 years and beyond, hence Woolies’ current investments in Botswana, Kenya, Namibia, Ghana and a little place we like to call the RS of A, and its bold yet understated intentions for Mozambique, Zambia, Uganda and indeed Angola. In unrelated Woolies news, the dapper one was recently crowned Responsible Retailer of the Year at the recent Oracle World Retail Awards. The award goes to the retailer which the jury feels has taken the most significant steps to enhance its reputation.

Comment: We tried to “enhance our reputation” once by taking the significant step of smoking an entire pack of Chesterfields behind the bottom cricket nets during Friday afternoon cadets, and did it work? It did not.

Woolworths’ holdout franchisees, as represented by the Woolworths Franchise Association, are apparently “shattered” by a change in negotiating tactics on the part of the Dapper One. Originally, the idea was that Woolies would negotiate with the Association to agree on a fair valuation method for the stores. However, it now transpires that the Association did not receive a mandate from the franchisees to negotiate on their behalf, and Woolies is now having a word with the individual franchisees privately. Also, Ian Moir, who was originally to be conducting the negotiation on Woolies’ behalf, has been pulled off the case, which has been handed over to unknown quantity and newly-appointed head of franchise John Fraser. Interestingly, Woolies doesn’t have a buyback clause with over half of the 76 franchise stores, and will allow those stores to run the course of their contracts, should they so desire – at a substantially reduced PE.

Comment: It started ugly, it’s going to get uglier.

Woolworths is boosting the acceleration of their refrigerated trucks with nitrous oxide (NOX), in order to get them to stores quicker, thus ensuring the legendary integrity of the Woolies cold chain. Oh, wait, we got that one almost totally wrong. They’re actually experimenting with ecoFridge nitrogen refrigeration in their trucks, which has no moving parts, allows various temperatures to be maintained in a single truck, and lasts twice as long as mechanical systems. Shoprite, you will recall, undertook a similar experiment last year.

Comment:

Country Road, Woolies’ plush clothing business in Aus was happy some ten weeks ago to take on a new CEO in the form of one John Cheston, recruited from Robinson & Co, Singapore’s largest listed retailer. And just as happy, it seems to see the back of him last week, on the grounds, it is believed, of irreconcilable differences with the board. Cheston had also, it seems, had problems with the Robinson’s Board, which, he was forced to deny back in ‘08, might not have been in full support of his growth strategy for the business. Compounding the difficulties – if any – might have been the presence on the Country Road board of Ian Moir, latterly Woolies MD but previously the Country Road CEO, with a direct line of communication with some senior management.

Comment: A bit of a shakeski upski down under for the Dapper One, whose Country Road kecks and sundry other items continue to sell like hot goannas over here.

An embittered Woolworths franchisee – the same feller who led the charge to get franchisee representation on the board last AGM – has suggested there may be something more behind Woolies’ closing of the franchise operation than a desire to simplify the business. Dennis “MC” Hamer reckons that an overseas private equity crowd is eyeing Woolies for a buyout, but doesn’t want the mom ‘n pop side of the business. Sounds a little mischievous to us.

Comment:

Woolworths has offered, if that’s the word, to buy back all 76 of its South African franchise stores at fair value, in order to save on operational costs and to remove complexity from the business, according to the official line. Some of the franchisees, who see the move as a hostile takeover, would prefer a higher purchase price, while certain snide analysts have pointed out that under the incipient Consumer Protection Act, a franchisee is considered a customer of the franchisor, with all the obligations and headaches that that entails. Specifically excluded from the arrangement, which should be complete by June ‘11 is the relationship with Engen, where, you will recall, the burly petrol ous run those dinky little triangular Foodstops.

Comment: Word on the street is that the CPA is going to cause all sorts of businesses to look more seriously at vertical integration of this nature.

Turnover was up 7.9% to R23.7billion over at Woolies, where the Dapper One reported a somewhat less understated increase in profitability to the tune of 23%, to R1.76billion for the year to June. Some of that handsome profitability came courtesy of the sales of a majority stake of its financial services unit to ABSA for a suave R380million, although this was offset by a foreign exchange loss of R57million. The Woolies' consumer, it seems, has recovered from her panicked state of early ’09 and is picking her way through the kikuyu grass back to the waterhole. Further abroad, and despite a battered Aussie punter who has sustained 6 eenterest rate hoikes, County Road continues to bring in the swag and will thus not be sold to any of the apparently willing buyers who are circling it like dingoes round a wounded jumbuck. Then back to the savannah, where things are looking up for expansion in East and West Africa alike.

Comment: When the story of our age is told at last, Woolies’ marvellous weathering of the great decession will be one of its most thrilling chapters.

Coca Cola, who came first in the Sunday Times Top Brands survey, followed by Nike? No. Castle? Think again. Koo, would you believe, which has been keeping us all in baked beans and apricot jam for how long now. Coke also topped the Community Upliftment section, with Pick n Pay, you will be pleased to know, in third, and Le Grand Bleu also topped the Green section, pipping an understandably downcast Woolies to the post. According to TNS Research Surveys, who pulled the whole shebang together, recessionary punters are still turning to the brands they love and trust in the downturn, and to brands they perceive to have a proudly South African element.

Comment: Fitting, as the entire discipline, if that’s the word, of branding was virtually invented by the manufacturers of the sugary brown stuff with bubbles in.

Woolworths is now sourcing 68.6% of its produce from suppliers who subscribe to its Farming for the Future principles, which advocate a move away from traditional farming methods to new methods which improve soil and plant health, preserving soil and water, and promoting biodiversity. The idea is that by 2012, it wants to be sourcing 85% from Farming for the Future suppliers, 6% from organic suppliers and only 9% seasonal exports, like those Israeli avos we swear are not in that salad, even though it’s August. Woolworths pays for annual assessments of farms which subscribe to the guidelines, which include such arcane measures as soil microbe and mineral management and wastewater management. Under this initiative, farmers are attempting where possible to use compost in the soil for example, rather than using an excess of chemical fertilisers.

Comment: Dear old compost, eh, rather than petrochemical derivatives? Revolutionary stuff, which the bigger chaps would do well to emulate.

Woolies is the biggest contributor in one of the best bits of social business we’ve heard of in a long while. The Clothing Bank gets waste clothing – end of sale items, customer returns and bulk import rejections – and makes them available for resale by single, unemployed women, who get their first consignment on credit (hence the “Bank” bit) and thereafter pay. All manner of training and banking facilities are part of the deal, and while numbers are not out on how many women are involved, 70 are on the waiting list. Clothing to the estimated value of between R200 and R900million goes to waste every year in South Africa, and don’t get The Clothing Bank started on cracked homeware and tired computers.

Comment: Now we know where all the size 36 men’s trousers go...

The Posh One has reported a growth in sales of 10.5% in the year to June, with clothing and GM leading the charge at 11.2% as Woolies’ better-heeled punter pieced together the credit card she’d chopped up a year or so ago and came teetering into the nearest flagship store on her Jimmy Choos. Food sales were up a hardly less impressive 9.9%, with like store sales up 5.6% and internal inflation kicking along briskly at 5.2%. The chaps in the leather armchairs are understandably chuffed, with the old share price climbing 75% over the year, a damned sight better than everyone else. The consensus is that while Woolies took a manfully disproportionate share of the punishment on the way down, it’s back in the prefect’s room and on the right side of the little bamboo stick on the way back up.

Comment: Or something. Anyway, jolly good show.

Woolies has opened the third of its airport stores, this one at Durban’s King Shaka International, which despite the removal of the statue of the man himself, on the grounds of it being too skinny or not warlike enough or something, is the most gorgeous edifice of its kind on South African soil, echoing as it does the billowing curves of the surrounding landscape, walls of blue green glass filtering the afternoon sun as you make your final approach – but we digress. Nice Woolies, though, selected items of apparel for the discerning traveller, sandwiches, baristas, you know the story.

Comment:

Woolies’ recycling initiative at eight Engen service stations in the Western Cape has proved very popular with the moss-covered punters of that rainy peninsular. Shortly after the trial began, Nampak, Woolies’ partner in the worthy endeavour, doubled its collection from the more popular sites, and increased its frequency at most of them. Woolies intend installing collection sites at another 50 Engens over the next six months.

Comment:

Woolies and Netcare have, regrettably, decided to untie the knot and pack up their joint venture in pharmacy. The three trial store-within-a-stores – one in Cape Town, two in Jo’burg – that they opened together are due to close at the end of June. Woolies Food MD, although not the medical kind, obviously, Zyda Rylands says that pharmacy was an innovative idea at the time, but something which is no longer a priority, and Netcare has also said the whole jolly shooting gallery is not core to their business. Drugs, it appears, are a costly undertaking unless you achieve some sort of weird alchemical critical mass as Clicks has managed to do.

Comment: And Woolies has other means of attracting the posher punter into the store than convenient codeine.

Trade Intelligence extends its condolences to the Susman family, who lost patriarch David last week at the age of 84. David Susman was a former MD and Chairman of Woolworths, and was instrumental in the 1981 merger which saw the establishment of Wooltru and placed Woolies on the growth trajectory which has seen it dominate the upper end of South African retail pretty much ever since. “He had this vision of a business where quality was paramount,” says former Wooltru MD and nephew John Rabb.

Comment:

Pick n Pay, Shoprite and Nielsen have agreed not to talk about market share any more, which is great news for us, because, um, because ... hey wait a minute! Last time anyone checked, Pick n Pay was still the biggest guy in town with 34% (or 33.7% without its now defunct Score stores) while Shoprite had grown 1% to 30%, SPAR was coming in a game third at 25% and Woolies an understated 10%. Together, interestingly, they own only 50% of the South African food market, the rest of which is owned by the independent and the informal sector, who are more concerned with making a living than beating their chests and haggling over percentages which may or may not mean anything.

Comment: But assuming they do, isn’t it in the interests of various stakeholders to know? And isn’t it anti-competitive to collude in the suppression of those numbers? Tweet us <a href="http://twitter.com/TradeTatler" target="_blank">here</a> if you have a view on this.

Woolies has recently commissioned the first supermarket-based refrigerator in the S of A, and thus far it is delivering handsomely vis-á-vis efficiency. Further CO2 units are to be installed in new stores, while older stores will eventually be retrofitted with the technology, which has been installed successfully in the UK by Marks & Spencer, and is pretty much impossible to understand.

Comment:

Still on the subject of wedge and how to unload it, Woolies has come up with a new addition to their range of Plastic for the Posher Punter. Entitled the Woolworths Black Credit Card, it’s aimed at premium shoppers, and is backed by Absa, Barclays and Visa. It gives shoppers 3% back in vouchers on Woolies buys and 1% elsewhere, a free subscription to Taste (the magazine, obviously, not the sort you can’t buy), free deliveries of Woolies purchases online and – here’s the real kicker – two free cappuccinos per month. And if you come rushing in for yours before 31 May, you’ll get a grand’s worth of fashion vouchers straight off the bat.

Comment: We can see it in its glossy black splendour already, snuggling cosily into our Louis Vuitton wallet.

Woolies has employed photographer Oliviero Toscani, who isn’t from these parts, but is the man behind the United Colours of Benetton campaigns, to shoot the campaign for its winter Play the World range, out this week, using iconic non-blonde Alek Wek as a model as well as our very own Lucas Radebe, himself a tried and tested Woolies clothes horse, and a South African, which is nice.

Comment:

Unless this is an April Fool’s joke put about by the Dapper One in a rare moment of sophomore humour, jelly beans at Woolworths are set to become several tones less gaudy with the removal of Azo dyes (of which tartrazine is one) from the Woolies menu. Other kid-friendly foodstuffs from which the harmful dyes are to be removed – at the request of customers – are wine gums, cupcakes, fruit nectar squashes, and Easter eggs. Woolies has already taken tartrazine and MSG off the shelves and out of the fridges, and this latest move is another determined step on the Good Food Journey we’ve been hearing so much about these how many years.

Comment: C’mon, Woolies. A foot wrong, just this once.

Despite their dashing new black logo, designed, no doubt, with lashings of carbon from the tip of Creative Director Vince Frost’s Australian pencil, Woolies are making a big effort to reduce their carbon footprint by 30% by 2012, reducing their relative transport emissions by 20%, their electricity usage by 30%, building an experimental green store, sourcing food locally where possible, helping suppliers set up model green factories and working with scientists to ensure the sustainability of farmer’s soil, increasing its CO₂ absorption. And they’ve managed a 12% reduction in electricity usage since ’04, in which period they’ve substantially increased their actual footprint.

Comment: Exemplary stuff, that man in the dark and beautifully cut suit.

Business data boffs McGregor BFA have put together the collected thinking of all the gimlet-eyed analysts we love to meet over tiny little quiches at results presentations, and the sharp-nosed fellers don’t have a kind word to say about retail right now, unless they’re talking about Woolies, which broker consensus rates as a “buy”. Shoprite and Pick n Pay are rated as “sells”, while SPAR cracks the nod as a “hold”. Food retailers – a defensive stock in these treacherous times – are generally held to be overpriced at the Johannesburg Securities Exchange (JSE) where they trade at premium multiples of up to 18 times. However – and here’s the rub for Johnny Foreigner – they’re considered to be underpriced for adventurers relative to retail stocks from other developing countries, currently trading at a 25% discount.

Comment: Arcane stuff, but the lifeblood of this great creaking edifice we call capitalism.

Woolies are going Private Label, and here we’re talking the real deal, not pricy gear in Woolies branding, but a value line called Essentials which, according to the Natty One, will bring the best of Woolies’ quality to today’s sharp-eyed punters at a price they can afford. Essentials will cover a range of bases, from dairy to snacks to home and personal care, and will be available in Food markets from round about now. By the end of May, the range will include almost 200 lines. Some of the range will comprise existing products, repackaged, but much of it will be original. Bigger packs and multi-pack offerings will up the value and convenience, and prices will range from parity with competitive retailers to as much as 10% below. The range will also be a first major outing for the blocky new Woolworths branding we’re seeing more and more of these days.

Comment: A shrewd and timely move by a proudly resurgent Woolies.

Last week we incorrectly reported that Paula Disberry would be taking over Supply Chain and IT, with Fawza Essa in Retail Operations over at the Smart One. As our friends at Imperial Logistics kindly pointed out, the true situation looks more like this:
- Clothing and General Merchandising Planning: Paula Disberry
- Supply Chain and Information Technology: Fawza Essa
- Retail Operations: Andrew Levermore

Comment:

The Succession Plan is unfolding neatly over at Woolies, where Mr Susman’s appointed successor, Ian Moir, has put together a structure which leads neatly up to the big handover in November. Zyda Rylands has been moved into the MD: Foods position, while Julian Novak also has a senior but unspecified position in Foods. Paula Disberry is taking over Supply Chain and IT, with Fawza Essa in Retail Operations and Charmain Huet in Marketing. According to Moir, who joins us from sunny Aus where he presided around the turnaround of Country Road, his focus will be operational, as Mr Susman has already done most of the big thinking. The idea is to cut duplication, streamline structures, speed up decision making and measure the performance of the senior team.

Comment: Having weathered the recession and grown its share of the food market, the Classy One seems poised for interesting times.

Woolies kicked off the results season last week, and are looking a little like the Stormers, classy and promising, and able, perhaps, to score in Aus. Sales were up 9.3% in the first half to R11.5billion, and headline earnings per share were up a pleasing 13.8% to 80.1c. They also report “market share gains” in both food and clothing, claiming 8.4% of the food market although perhaps instructed by the Shoprite/Pick n Pay spat last year not specifying whence the gain might be coming. Woolies say they’re making progress both with their customers’ perceptions of affordability, and with an improvement in the availability issue which dogged the dapper one a couple of years back. Excluding the sale of the debtor’s book to Absa in ’08, profits were up a presentable 10.4% to R955million before tax, with gross margin improved mainly through better procurement and lower level of promotional activity.

Comment: A spruce showing from the retailer which perhaps lost most over the recession, yet weathered it with characteristic <em>savoir-faire</em>.

Here’s the lowdown: Woolies launch their social networking ‘Lovebirds’ Valentine’s Day campaign but the silly designer leaves the “s” off the URL on all printed communications, which point to the site www.woolieslovebird.co.za. Woolies, in the meantime, have registered the www.woolieslovebirds.co.za domain. So clever shopkeepers Yuppie Chef register the www.woolieslovebird.co.za domain, and demand that Woolies match every rand donated by Yuppie Chef fans to their appointed charity, Soil for Life. Woolies, and here’s the lovely bit, graciously agree to the terms but let Yuppie Chef keep the domain anyway, provided there’s a link to the real site. Then Yuppie Chef invite other businesses to join in the donation-matching mayhem, and R50 grand later, the well-intentioned shekels are still rolling in.

Comment: And then there’s the legal route...

The Woolworths Growth Academy is launching a fast-track career development course in retail to 20 previously disadvantaged candidates, both graduates and non-graduates, as its contribution to an industry which is somewhat lacking in the formal skills department. The 12-18 month course is a JV with the Wholesale and Retail SETA and the University of Stellenbosch. In other Woolies news, Woolworths Holdings is issuing 11 million shares from its unissued share capital to Woolworths (Proprietary) Limited, for the purposes of some arcane JSE requirement or other. The capital raised will be forked out to shareholders in lieu of the interim dividend due for the six months ending December.

Comment: Now where did we put those Woolies shares? Ah, there they are.

Woolies, would you believe, who boosted by the sales of classy yet inexpensive gear, delivered one of the very few trading updates that didn’t disappoint. Sales for the six months ending December were up 9.3% with comparable store sales up a solid under the circs 4.4%. These numbers were helped along by a bit of spatial expansion, and were not hindered, for a change, by sales at Country Road, the posh clothing retailer in Aus, where there is apparently a demand for apparel other than Driza-Bone coats and Blundstones. While Woolies recently warned shareholders that earnings per share are likely to be 15-25% down on last year, canny analysts remind us that last year there was that whopping payout from Absa for the Woolies debtors book which artificially boosted things.

Comment: There is absolutely no truth in the rumour that Woolworths will be replacing Christina Storm on the set of Celebrity Survivor.

Woolies new Foodmarket in Constantia Village has boldly launched with the new Woolies identity. The work of Massimo Vignelli, the logo was in all likelihood developed under the stern eye of Woolie’s new creative director, recent Australian Vince Frost, which for those in the know is like saying “Woolie’s new musical director, Mick Jagger”. The new store, according to Foods director Julian Novak, puts the “food” into “foodmarket” with full on butchery and fishmongery, cheesier cheeses, a deli counter and a crispy fresh in-store bakery.

Comment: Woolies has very publicly expressed its support for local creative talent, which is widely acknowledged to punch far above its weight globally, and which may in fact have proved itself equal to the task of slapping a big sans serif W on a black square.

Online sales at Woolies have grown by 30% for each of the past two years, and they’re expecting 35% growth for the next five years. And next year, although they’re not saying what right now, expect some big changes in this department, with the Dapper One looking for new ways to connect with an increasingly wired generation of punters. As a little taste of this, you can now order Christmas hampers online for your nearest and dearest, who will be delighted with the keepsake boxes and the goodies inside them, from organic coffee to the latest issue of the tastefully-titled Taste magazine.

Comment:

Sometimes, an immaculately-cut suit is not enough to protect one from the hurly-burly of the AGM, activist shareholders popping up all over the show with a mad gleam in their eyes, and the franchisees in revolt. Or so Woolies found this week, when the shareholder known only as Mrs Gilmore, famous for her determined interjections, questioned the credentials of a couple of the new Non-executive Directors. And the franchisees, some of whom believe that Woolies is trying to squeeze them out, attempted – using impeccably procedural means – to have one of their own appointed to the board. There are 80-odd franchise stores, located in smaller centres, and contributing, say the franchisees, around 20% to turnover, a number Woolies disputes. There is a view that when their contracts expire, Woolies will buy their stores back into the business, something many of the 37 franchisees don’t want to see happen.

Comment: Swashbuckling stuff, in a week when Woolies also announced that it expected first-half earnings to drop 20% in tough trading conditions.

Woolworths continues to gun it on the sustainability front, this time piloting a refrigeration system driven by natural gas, which does not contain ozone depleting CFCs. The system, which took three years to design, is installed in the rather crustily-titled Grey Owl store in Midrand. In more frivolous news, the beauty department in the flagship Sandton store has just had the most divine makeover.

Comment:

Woolies Food is the overall winner in the obscurely-tilted 2009 Ask Afrika Orange Index service excellence benchmark. Service, you may recall, is one of Woolies key brand values, along with quality, innovation, value for money, energy, a focus on sustainability and affordable pomegranate and aloe juice for the masses. Nice one, that chap in the dark suit.

Comment:

Breezing through the new wing at CT International on our way to a welcome Johnny Walker in the first class lounge, we spotted this curious bit of non-spec branding outside what we took to be the soon-to-be-opened Woolies. It’s designed using something the interestingly-bearded fellers down in the studio tell us is a “bold, contemporary sans-serif font”, which suggests that the Posh one might be targeting a younger, funkier bunch. The store itself is a 700m2 “boutique” affair with a mix of food, casual and holiday fashion, beauty and cellphones, as well as a “to go” counter, and will be open from 5 in the a.m. to 11 at night. It’s a replica of the successful experiment at OR Tambo.

Comment: Except, of course, for the new branding...

Doing some research on intergalactic travel, we happened upon this, somewhat unexpectedly, and felt strangely guilty. Thank you, Mr Ackerman. But why on earth The New York Times? And how did you know we’d be there?

Comment:

Woolworths has been recognised as having “outstanding climate change-related disclosure” and now occupies second place on the JSE’s Top 100 Carbon Disclosure Leadership Index, which measures businesses on the quality of the info they disclose in response to the international Carbon Disclosure project’s 2009 questionnaire. In particular, Woolies has been given the approving nod for its holistic and strategic approach and the implementation of this through the Good Business Journey. Woolies is aiming to reduce both carbon emissions and relative energy usage by 30% by 2012, though a range of efficiency measures which include remote monitoring of lighting and aircon, heat recycling and automated energy systems.

Comment: Sterling stuff from the impeccable one.

Further hats off to the dapper one on the green front. Woolies (this just in) is pioneering a new method of farming fresh produce, under the banner Farming for the Future. This project aims to radically improve soil and plant health, preserve natural resources like water and topsoil, and protect natural diversity. Initial trials show that yields are more consistent, and land, water, pesticide, insecticide and fertiliser usage is reduced. Currently, over 50% of Woolies’ fresh produce is grown this way, and by 2012, all of it will be organically grown or grown using these principles. Each farm participating in the project has been independently audited for the practices aimed at achieving the defined outcomes, and some, which have been farming this way for five years and more, are up to 90% compliant.

Comment: Nothing less than an agricultural revolution, in which, characteristically, Woolies is leading the way.

Sustainability is the hottest ticket out there right now, and Woolies has got itself a fistful. The latest step on the Posh One’s Good Business Journey is the rollout of recycling depots for paper, cardboard, glass and plastic at eight Engen sites in the Western Cape where, we are told, the folk are especially keen on recycling because of the Marntain, hey. Also involved are Nampak, who collect the waste on their regular recycling routes. The initiative is a pilot which will determine the rate of national expansion for a recycling campaign.

Comment: And a stroke of genius, as most recycling sites are located at an inconvenient distance from where you can buy a litre of milk, some cellophane-wrapped croissants and a box of ciggies.

Plucky outsider KFC won the Grand Prix in this year’s Sunday Times Top Retail Brands Survey, would you believe it, with Edgars next and Shoprite blustering home in third, and Clicks in fifth, after non-retailer Spur, narrowly pipping Pick n Pay in sixth. In the Overall Grocery Shopping experience, however, it was Pick n Pay in pole, with Shoprite, Checkers, Woolies, Spar and Game screaming up the straight in that order. Game (first), Makro (third) and DionWired (fifth) delivered the goods for Massmart in the Electronics category, while Woolies Food Stops came in at a creditable third in the forecourts division.

Comment: Oddly enough, Pick n Pay came nowhere in the Favourite Family Restaurants category.

Last year, you will recall, Woolies sold a 50% plus one share stake in its Financial Services Division to Absa. How’s that working out for them? Pretty good, actually, they assure us in an old Etonian drawl. It’s looking at launching a range of products for upper-income punters, as it shifts gear from a period of consolidation after the sale into something a little more exciting. The JV with Absa allows it to leverage Absa’s funding, credit risk, customer value and marketing capabilities combined with Woolies’ distribution channel and customer base – which in financial services totals 1.8 million of the better-heeled among us. Pop your head into the stores sometime soon and you will see them resplendent with advertising for a trio of metallic credit cards.

Comment: So the Absa thing was in no way a bailout then but something of a devilish move by two astute operators, who just happen to speak in different accents.

The Woolworths Summer Beauty festival – think special offers and gifts with purchases from a range of international fragrance houses and jetsetting beauty brands – has just four days left to run – so sashay on over to one of several of their posher stores – think Canal Walk, Gateway, Melrose – for free makeovers, goodie bags and a chance to win one of Paris Hilton’s own chihuahuas!

Comment: Delete Comment