
THIS ISSUE: 10 May - 16 May
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Pick n Pay In the trenches
The travails of the Big Blue are well documented by this stage – declining market share, only 15% of new stores where they are wanted by customers, slack growth. What is refreshing this week is the disarming honesty of the man at the top. Instead of the usual bluster and obfuscation one has come to expect of the companies listed on the JSE – even those doing rather better than Pick n Pay – Richard Brasher is telling it like it is, speaking of a management which needs to work together as a team rather than “a loose coalition”, of last year’s undue optimism that green shoots were about to appear, and of a recovery which will not be measured in years but in lots of years. On the upside, Pick n Pay have appointed Mr Delivery to deliver your online shopping orders in a fleet of Tuk Tuks.
Comment: Which sound suspiciously like one of the “new things” Mr Brasher was warning against, which should not be done at the expense of making what they already have work.
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Nakumatt Ooooooooooh, why didn’t we think of that!
These days, you are more likely to find a story about enterprising East African retailers in this august tome than any of our big six. But have a gander at this, and you may understand why. Nakumatt of Kenya has gone and launched a unique “store on wheels” format, a 200m2 emporium which may be packed up conveniently into a 20ft shipping container and moved to significant events in remote areas as needed, changing the ranging to align with the needs of each particular market. It will, for example, be launched on 1 June at the Rhino Charge offroad motoring event, where customers will be able to pick up their pre-order of difficult-to-get-in-the-bush delicacies, including frozen and chilled items. Nakumatt on wheels is handily acronymed NOW.
Comment: Look, it’s not going to blow turnover through the roof. But what an exercise in feel-good branding for a retailer with continental ambitions. We love these guys.
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Clicks Healthy
While the Clickety One’s interims were not all that, everyone seems to agree that their fundamentals are solid, based as they are in the recession-resistant corporate pharmacy/beauty model, of which they were an early adopter and where they have established an almost unassailable lead, owning 60% of the category, and steaming confidently towards 500 stores and maybe, according to the confident Mr Kneale, more than even that. He readily acknowledges that his customer base of middle-income punters is more than a little rattled right now, but this too shall pass. All of this is raking in foreign cash, which Clicks, having its North American investment instrument, is doing nothing to discourage.
Comment: Mr Kneale looks so good in a suit he could almost be in charge of Woolworths.
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Astral Up above the world so high
Astral interims for the six months to March are in, and believe us, you don’t want to know. Well, OK, but don’t say we didn’t warn you. Revenue was up a scant 5% to R4.24billion, but operating profit was down 80% year-on-year to R64million, driven thither like a panicked hen by cheap poultry imports, a spot of industrial action, an increase in feed costs, a cutback in something called “bird placements” which you are welcome to look up if you’re interested, slow growth in the economy with its depressing effect on consumer spending and an unseemly fracas, if that’s the word, with the Competition Commission which will probably result in a fine of some sort to the tune of R17million.
Comment: A glimmer of hope on the horizon is the South African Poultry Association’s application to the International Trade Administration Commission (ITAC) for the implementation of higher general tariffs on poultry imports, which if successful should ease things somewhat.
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Astrapak Like a diamond in the sky
In further bad news from businesses sort-of named after the massive burning orbs that cycle slowly past in the heavenly firmament in their measured but meaningless pageant…sorry, what? Ah yes the Astrapak results. We must lay off the post-prandial cognac. Revenue from continuing operations was up 3.9% to R2.6billion‚ helped along by a 4.2% increase in volumes over the previous year. But profit from operations before exceptional items fell 29.2% from R163m to R116m, and operating margins fell 2.1 percentage points to 4.4%. And this was due substantially to two unfortunate events – last September’s transport strike, and a fire at East Rand Plastics, which destroyed assets to the tune of R56million and did little for the performance of the flexible plastics division as a whole.
Comment: Unfortunate. Better luck next time, that wrap-y, bottl-y feller.
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Black Middle Class They’re ba-ack!
This is very 2005 of us, but Black Diamonds, defined as earners of between R16 and R50 grand per month, under the age of 44, with a tertiary education and white collar job, have doubled in number over the past eight years from 8% to 16% of the population, and increased their spending power to R400billion. This is due in part to increased access to education, and perhaps more substantially to the abundance of state jobs in the sector – 40% of skilled black people work in government as opposed to 13% of skilled whites. Elsewhere in the world, growth is fuelled by the private sector, which may be periodically shaky but is ultimately more sustainable. Where do they live? 46% of them, naturally, in Gauteng, with KZN a promising if distant second at 18% and the Eastern Cape in 3rd at 8%.
Comment: All this and lots, lots more in the fascinating UCT Unilever Institute report enticingly titled ‘Four Million and Rising.’

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