THIS ISSUE: 19 May - 25 May
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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SPAR Green and gold
Verdant times over at the Jolly Green One, as it reaps the bounty from the softly saturated swards of the Emerald Isle and the vertiginous, viridescent spring meadows of Switzerland. Whew. Where were we? Ah yes. The SPAR interims after which you had so solicitously enquired. Turnover up 16.72% to R42bn, helped along by the strength of the Euro in its recent overseas acquisitions, and operating profit a more than respectable 13.8% to R1.2bn. The Group added 8 new SPAR’s, 18 new Build It’s and 30 new Tops’s to the mix, revamping 66 stores and bringing the group’s total up to just short of 2,000 stores. One of the big successes of the cycle was Private Label – SPAR’s own brands increased their turnover to the tune of 10.6%. For a more detailed and nuanced take on the interims, you will most certainly want to consult our Results Summary.
Comment: Excellent work under tough conditions, SA’s friendliest retailer.
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Pick n Pay Pull up, Papa November Papa! Pull up, dammit!
In 2012, you may recall, Pick n Pay awarded a five-year managed transport contract to logistics outfit Resolve with the idea that Resolve – part of the IMPERIAL Group - would achieve savings on transport costs as a result of integrated planning of demand and supply transport services. So successful has the partnership proved that Pick n Pay has extended the contract to 2020, with Resolve adding services that include transport planning, management and optimization, and the implementation of an integrated and outbound logistics control tower. Resolve have saved Pick n Pay a reported R600m so far, with a year-on-year increase in throughput of 16%, which is impressive in anyone’s language. Actually in Russian, it’s ????????????.
Comment: We sincerely hope that the control tower is an actual tower, staffed by men and women in razor-sharp shades hopped up on coffee and adrenaline. But it’s probably a clever piece of software.
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Shoprite Red Tide
Doubling down – well, actually we’re unsure of the exact proportion but you get the picture – on their investment in Angola this week are Shoprite, who are set to drop another $572m into that oil-fuelled economy. Late last year, Angola overtook Zambia as Shoprite’s biggest foreign holding and despite the deflation of the oil price; such luminaries as Bloomberg expect good growth to continue apace there. Shoprite, as you may recall, already has 56 stores in Angola (including franchise), many of which it will be refurbishing – and has recently opened the Luanda store which burned down last year. The Angolan government is not without appreciation for Shoprite’s commitment, and is investigating potential tax breaks and other incentives for the Big Red One.
Comment: This is Africa, anything can happen. But at this point, it would seem that Shoprite’s lead on the continent is basically unassailable.
MANUFACTURERS AND SERVICE PROVIDERS
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Tiger Brands Something about stripes here – Ed
And since we’re talking about interims – yes we were, pay attention – Tigers have just landed on our chestnut desk with a solid thwack, ah, thank you Smithers. Turnover up 9% to R15.9bn, with after tax profit up 44% to R1.7bn, which we assume has something to do with the Dangote write-down, we’ll let you know as the story develops. One of the big successes here in the Republic was the growth of home care, which grew sales 27% to R570m, followed by beverages at 17% for a total of R758m. The operating income in snacks and treats, however, was down 12%, accounting for the aggregate profit growth of just 4% in the combined consumer brands food business. In Kenya and Ethiopia, sales increased 60% to R514m while West Africa was up 26% to R440m.
Comment: Good results considering the awkward interregnum in which Tiger finds itself, and a testament to determined place holding by journeyman acting CEO Noel Doyle.
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Astral Turns out the sky is falling
So the African Growth and Opportunity Act (AGOA) have struck with the force of 65,000 tons of industrially produced poultry, and how are we feeling about it? Not so great, actually, if you’re in the chicken business yourself. The industry is already reeling, with the drought and the weak rand pushing up the cost of feed, and competition from cheap American and Brazilian imports making it damn near impossible to recover costs. This explains why SA’s number 2 producer Astral saw profits tank 44.73% to R194m, and if you’re one of the smaller outfits, which have to compete with big players like Astral, as well as with the Yanks and the Brazilians, things are even worse.
Comment: The woes of this vital industry – which contributes around 22% to SA’s agricultural output – seem deep seated and structural, to the confusion of both business and government.
TRADE ENVIRONMENT
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Africa We hear that Oagaduogou is lovely in the spring…
An excellent piece over here from our friends at Supermarket.co.za, laying out what’s needed for those businesses wishing to dip a toe into the tempting waters of the African market. Here are the top five tips, as identified by consultant Guy Lundy: Source local products and employ local staff if you wish to retain the goodwill of both government and populations where you trade. Start close to home, cutting your teeth in Namibia or Botswana before hitting the DRC with your Landy and your panga. Be selective about where you go, taking into account such variables as language barriers, banking systems and levels of corruption. Finally, choose your local partners wisely, and make sure you’ve done your homework: Massmart (Kenya) and Tiger Brands (Nigeria) might have some thoughts on this one. And where to go? Mauritius, Mozambique, Kenya, Tanzania, Zambia, Nigeria and Ghana, remain the top spots, although you can still expect some infrastructural and other challenges.
Comment: But don’t let them stop you, you latter-day Kingsley Holgate, you.
IN BRIEF
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Amazon Bzzzzzzzzzzz….thwack!....tinkle….
Amazon, which is terrifyingly about to introduce to the world drone-delivered kettle-bells and copies of War and Peace, might also be poised to give Tesco and other UK retailers a run for their money, apparently, with the rumored introduction of a range of private label groceries, which would include laundry powder, baby food and coffee.
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Woolworths Tie me department store down, sport
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.
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