THIS ISSUE: 28 May - 03 Jun
YOUR NUMBERS THIS WEEK
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Massmart Massive attack
That Massmart trading update you didn't even know you wanted, but now that it’s here, you’re… what? Oh, sorry. Like store sales up 7.4% for the totally random first 20 weeks of the FY we have no choice but to call ’15, much of this, rather thrillingly, due to growth in market share. Either that or the discovery in a hidden valley of the Magaliesberg, of a lost tribe of low-to-middle LSM consumers with a mysterious new source of disposable income. Total sales growth for the period was 9.5%, which under the circs is at least 20 weeks’ worth of respectable. Massbuild, with total sales growth of 15.5% and Makro at 11.6% were the star performers, while Masscash Wholesale at 2.8% was emphatically not. At the AGM, showing himself to be no pushover, new CEO Guy Haywood took a thinly veiled jab at “The Others”, over the mall exclusivity issue: “Some major food retailers continue to defend lease exclusivities, thereby inhibiting competition,” he cheekily said.
Comment: Throwdown! As Massmart advance further into grocery territory, expect more of the same.
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Pick n Pay What’s your beef?
Zambia is one of those geographies (ahem) beyond our borders where Pick n Pay is doing rather well. But Zambia is tricky terrain, even for The Big Blue which is struggling to access sufficient produce from local suppliers, and is having to import, never a popular move with local governments. One such supplier is local butcher Zambeef, which has in fact stopped selling to Pick n Pay as it lacks the capacity to meet demand. Currently, Pick n Pay is procuring 75% of its fresh foods from local businesses, importing the rest to satisfy a shopper base hungry for the accoutrements and indeed trappings of modern retail. According to the Zambian Commerce Deputy Minister, some foreign businesses, no names mentioned, are importing upwards of US$1million a month in frozen foods “such as pies and pre-packaged samoosas.”Comment: Ah, the humble samoosa: seldom considered until you can’t get it.
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Choppies Going up…
Heck of a week for Choppies, there. Heck of a week. Not only did they list on the main board of the Johannesburg Securities Exchange (JSE) to rapturous welcome from punters desperate for a retail share that is not going sideways, but they also have some big news from Kenya. There they have announced the purchase of ten supermarkets from Ukwala, three of these in Nairobi, two in Nakuru and five in Kisumu. They will also, you may recall, be opening shop in Namibia, Zambia and Tanzania over the next two months, and are on track for their stated goal of 200th store by December 2016. And if you are inclined to punt, you will like these numbers: starting from a base of 57 Botswanan stores just four years ago, Choppies has grown annual revenue at around 27%, with gross profit compounding annually at a rate of 34%.
Comment: May we respectfully advise that you get in quick? These chaps know what they are doing.
MANUFACTURERS AND SERVICE PROVIDERS
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Tiger Brands Grrrr!
Shenanigans, we’re sorry to report, at Tiger Brands’ Kenyan subsidiary, Haco, where the management adjusted the profits upward to the tune of 897 million shillings – a sum which once discovered became something of a drag upon the Striped One’s profits for the half-year through March 2015. This saw the Kenyan outfit’s operating income decline 3% to 13.8 billion shillings, and resulted in the sacking of the MD, Geoffrey Kiarie. Mr Kiarie had overseen the pre-invoicing of customers, which looked good on the P&L but was not an accurate reflection on monies actually earned over the period. Tiger CEO Peter Matlare reckons it’ll take six months or so to sort the mess out, but otherwise isn’t too worried. He’s expressed confidence in both the fundamentals underlying the business, and in the leadership of Haco’s Chris Kirubi, chair of the JV and a 49% owner.
Comment: Still, the optics as they say in politics are not attractive, what with the Dangote fiasco in Nigeria still smarting.
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Rhodes Foods Statuesque
With a twirl of its golden moustache and a toss of its springing locks, Rhodes has delivered a very fetching set of interims for the six months to March. Profit after tax up 52%, off turnover growth of 12% to R1.3billion, R950million of that in regional sales which grew a boyishly handsome 18%. A lot of this was in canned pineapple, tomato paste and jam in glass jars, categories in which Rhodes leads the local market, and in canned fruit, canned jams, canned vegetables and canned tomatoes, in which it holds the number two position. And yet more of it was in corned beef, in which category it owns that paragon of manly muscularity, market leader Bull Brand. Sales in Sub Saharan Africa, where Rhodes operates in nine other countries, rose a strapping and youthful 39%.
Comment: As Cecil J. himself might have observed, their hinterland lies north.
TRADE ENVIRONMENT
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GDP Oh, that’s great. Just great.
In a week when crusty old doomsayer RW Johnson’s jeremiad on the State of the Nation has been doing the Facebook rounds, we received the news that for the first time in 11 years, Government has made a negative contribution to GDP growth, which has recently declined to a real quarter-on-quarter number of 1.3%. This, as we no doubt do not need to remind you, as unemployment ticks up to 26%. The main reason for the 0.8% decline in Government spending has been the resignation of a whole bunch of civil servants on the rumour of presumably disadvantageous pension reforms. On the upside, mining and quarrying contributed 0.8% to growth, while farming and forestry came in at -0.4%. Johnson’s thesis, if you prefer not to follow the link, is that it will be about two years before we default on the national debt and hand the reins of government over to the IMF.
Comment: So if minerals, arable fields and overpaid civil servants – three resources in which South Africa has an abundant share – won’t save us, what will?
IN BRIEF
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Tesco The numbers game
And before you get all huffy and self-righteous about Tiger’s woes in Kenya, remember that Tesco suffered a similar accounting scandal over its 2013 profits, which were overstated on the back of supplier payments (themselves presumably extortionate, but that’s another story) which were recorded before they were actually received. A group of disgruntled shareholders has since retained the services of one Philip Marshall, QC, a top-hole barrister responsible for bringing various successful high-profile actions against the rich and nefarious, including the Barclay brothers, Bernie Ecclestone and Kazakhstan’s BTA Bank. Watch this space. -
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Rooibos Let them drink tea
The Government has urged the rooibos and honeybush tea industries to engage with the Khoi and San communities to negotiate benefit-sharing agreements, on the back of a report which suggests that the industries’ success has in part been due to the exploitation of traditional knowledge, and to the farming of lands where those communities once harvested the foliage to make their soothing and (perhaps) medicinal beverages. Dispossessed by everyone for centuries, one can’t imagine that these communities are holding their breath for a pay out from the teeboere…
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