THIS ISSUE: 18 Aug - 24 Aug
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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Shoprite Red and Whitey and Black all over
Those Shoprite results then, with anticipation for which you have been agog: turnover for the 53 weeks through the end of June was up 14.4% to over R130billion, with trading profit on that up 15% to R7.278billion, on a margin which stayed unchanged at 5.6%. Outside of SA, performance soared like the mighty bateleur over the African savannah, with sales growing 32.6% for a contribution to Group turnover of over 17%. Back home, a more mature market; sales grew 10.9% to R94.167billion, generating a trading profit of R5.814billion. And all of this on internal inflation of just 3.5%, or under half the national rate of food inflation, which speaks well of Shoprite’s commitment of value for its consumers and the efficiency with which it runs its big red machine. Not one to let a results presentation go by without sticking to the competition, however obliquely, CEO Mr James “Whitey” Basson let it fall that market share remained solidly above 30%.
Comment: Shoprite’s position as Africa’s biggest retailer now appears unassailable – something they’ve achieved by moving fast but sticking to the fundamentals. Nice one.
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Steinhoff A bumpy ride
Oom Christo Wiese of Shoprite is, as you know, the majority shareholder of furniture retailer Steinhoff which has just put in a bid for UK outfit Poundland. We’re not entirely sure what Poundland is, to be honest. Maybe something of a hyper? Everything from toothpaste to lawn chairs, sort of thing. It does have 900 stores, which must be a drawcard, and a very mature online shopping presence, and Oom Christo has offered £610million for the whole bang shoot, upping his offer from £597million under pressure from US hedge fund Elliot, which popped out of the woodwork as a 13.2% shareholder just as the Montblancs were being dusted off and the papers neatly stacked on the gleaming cherrywood surface of Oom C’s desk. Elliot have since increased their stake to 17.5%, enough to scupper the deal with the support of other minorities. This is apparently their model – taking a stake in a business undergoing sale, then edging the price up, a process rejoicing under the delightful title of “bumpitrage”.
Comment: Oom Christo doesn’t look like the sort to lose it, but we imagine on this issue he has allowed himself the rueful sigh of one duped by a skellem.
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Pick n Pay The Diamond Coast
As you may have heard, Pick n Pay have entered into a JV with AG Leventis to open retail stores in Nigeria, which is all very exciting, and we wish them all the very best with that. Equally impressive, though somewhat less flashy, is the sterling work they’re doing consolidating their footprint closer to home. Take their progress in Namibia, for example, where they’ve just opened their 23rd store, at the new B1 City Mall in Windhoek. Pick n Pay Namibia is a franchise operation, a subsidiary of the Ohlthaver and List (O&L) Group, and enjoys the enthusiastic support of the Namibian government, whose Harambee Prosperity Plan encourages public-private partnerships for the eradication of poverty in that dusty but magnificent geography. This from Windhoek Mayor Muesee Kazapua: “Not only do we see job opportunities created by PnP, but the involvement of your business in the communities in which you operate makes this company one to be proud of.”
Comment: There was a time when we compared Pick n Pay’s Africa strategy unfavourably with the bolder efforts of businesses like Shoprite. No more.
MANUFACTURERS AND SERVICE PROVIDERS
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Reckitt Benckiser RB & R&D
Reckitt Benckiser is one of the under-the-radar businesses that bring legendary brands to market without making an inordinate splash about it. Nurofen. Dettol. Durex. Dr. Scholl’s. They’ve pretty much got you covered, as it were, head to toe. And speaking of Dettol, RB South Africa has just opened a new Dettol plant in Elandsfontein, in response to rising demand. The plant boasts the biggest Dettol R&D facilities in Africa and among the biggest in RB’s developing markets region, and Dettol being classified as a medicine, is a good manufacturing practice (GMP) compliant site. Even better news is that the facility will provide 20% more jobs, nice for Reckitts (as they’re affectionately known around the industry), as a business for which talent development is a priority.
Comment: It’s stories like this which renew our hope in the future of the Beloved Country, as a home for great businesses in a growing economy.
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Coca-Cola We’d sure like to help you out, but…
Coca-Cola Beverages Africa (CCBA) are pushing back on the government’s proposed ‘sugar tax’ of 2.29c per gram of sugar in sweetened beverages, suggesting that soft drinks are being unfairly targeted and that the financial burden may cost the industry – and the economy – as many as 60,000 jobs. In particular, they fear, they may be forced to renege on their commitment to R800million worth of small, medium and micro-enterprise development they undertook as part of the merger deal with SABMiller’s soft-drinks business and operations of the Gutsche family. The tax, argues CCBA, would amount to a change in the market conditions under which the commitment was made. One study shows that a sugar tax could result in 220,000 fewer cases of adult obesity. The beverage industry argues that the poor – who will carry the burden of job losses – will only become poorer, not thinner.
Comment: Job creation is a social good, as is the health of a population where obesity and its associated diseases are rampant. There is surely a world where one is not ransom to the other.
TRADE ENVIRONMENT
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Retail Sales Lies, damned lies, and Retail Trade Sales
StatsSA released the retail sales data for June, and boy oh boy they do not make for a cracking read. Not, at least, if you’re in the durable goods business, which saw a decline of 6.2% in the quarter from April to June. Our own great industry fared substantially better, with sales of pharmaceuticals and medical goods, cosmetics and toiletries up to the tune of 9.2% and food, beverages and tobacco in specialised stores up 7.5%. This, suggest our colleagues from The Times, point to a consumer who can’t afford the luxuries as the basics have become so expensive, with food inflation hitting two digits, unemployment rising and wage growth stagnating.
Comment: Tobacco surely needs to be dropped from the classification, on moral grounds if not on sales volumes.
IN BRIEF
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Barloworld 75 years young
Big up to our friends at Barloworld, which has become only the ninth company in history to survive the rough and tumble of the Johannesburg Securities Exchange (JSE) for 75 years. Fun fact: looking forward, not back, Barloworld is pioneering technologies which will allow remote oversight of any of the big machines they sell to companies in the 24 countries around the world in which they operate.
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Agriculture Down, on the farm
For the first time in 10 years, SA’s agricultural exports have fallen, from R106billion in 2014 to R104billion in 2015. This on the back of the worst drought in recent history and despite the recent weakness of the rand. Exports to Asia fell 15% to R12.2billion, and 3.5% to R47billion in Africa, our biggest market. On the upside, exports to Europe rose 8.3% to R28.3billion. That, surely, is a solid foundation for future growth.
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