
THIS ISSUE: 17 Nov - 22 Nov
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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Woolworths Food for thought
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.
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Massmart Back in black
We’re not going to say it, you can’t make us, bllngghmmgh….Black! Black Friday!!! Makro, traditionally the home of cut-price electronics in South Africa, are indeed going all out this Black Friday, with 26,000 lines on offer over five days, a new mobile pay-point system to speed up those smaller purchases on the way out, a new online drive-thru service at the Makro Riversands store, which (their words) “is a never-been-seen-before feature at a retail store in South Africa, enabling customers to collect their online items in an even more convenient manner,” a flat R70 delivery fee for both online and instore purchases, a R50 Uber discount to and from Makro stores and 10% back on your mCard.
Comment: Despite the profitability challenges that Black Friday presents, retailers need to face the reality of the position it now holds on the retail promotional calendar head on. The enthusiasm and inventiveness with which our retailers have embraced this annual pre-holiday bacchanalia of buying is, we suppose, a credit to them.
MANUFACTURERS AND SERVICE PROVIDERS
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IMPERIAL Logistics Turns out you can fry an egg…
Don’t know about you, but we have difficulty transporting a tray of eggs from the fridge to the stove without mishap. Not IMPERIAL Logistics, though: they’ve been transporting all of Nulaid’s eggs – that’s 12 million eggs annually – for the past three years without a single loss. OK, we don’t actually know whether there’ve been any losses, but the fact is, Nulaid have signed them up for the next five years, so they must be doing something right. IMPERIAL transports eggs from laying farms to packing stations in parts of the Beloved Country, then handling all outbound logistics to Nulaid customers. Handling a part of the workload are dedicated IMPERIAL ops people at four Nulaid sites, viz. Lanseria, Krugersdorp, Bloemfontein and Port Elizabeth. And transporting the eggs are purpose-built egg-spec trucks, with insulated bodies, vents, fans, and drop safes, into which is dropped money, not eggs.
Comment: Sounds like something of an eggsact science, to us.
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Oceana Brands Big fish
Those Ocean Brands results, and just wow. Revenue up a handsome +14% to R7.7bn, with after tax profit up nicely by +30% to… what? +300%?! Excuse us. What’s behind the numbers? Higher sales volumes of canned fish, improved catches of hake, horse mackerel and squid in local waters and menhaden in the US, more efficient operations and better handling of foreign currency. Revenues in the US were up by +24%, compared with +11% back here, and the tax bill was slashed from R188m last year to just R800 000 in FY2018, thanks in no small part to the corporate tax cuts in the US. Nice for the punters: they get a presumably handsome dividend compared to last year.
Comment: Some South African businesses have weathered the economic inclemency back home by diversifying offshore; it would appear that Oceana is just such a one.
TRADE ENVIRONMENT
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The Economy Beti or Veronica?
Let’s start with the good news: the delightfully-named BankservAfrica Economic Transaction Index (that’s Beti to you) has shown the biggest quarterly and monthly gains in the real value of bank transactions since, oh, December 2017, which is absolutely yonks ago. So that’s R871.7bn for the month of October, just to throw a number out there, which is a monthly increase of +7.5%. On the downside, we had the approval of the Constitutional Review Committee for a constitutional amendment allowing for the expropriation of land without compensation. This has got various analysts jumpy, with the prospects of capital outflows, further downgrades and chaos in the agricultural and other sectors. Finally, there’s the CPI, expected to tick up a couple notches to 5.1% for the month of October, and the Reserve Bank’s decision on the interest rates, which some economists expect to tick up to get inflation back in line.
Comment: Lots to stress about. But as always, some glimmers of hope too.
IN BRIEF
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International Retailers Wild West
We’ll be honest, we’re losing track of the ways in which Walmart is running to catch up with Amazon. Just this week: partnering with Microsoft to migrate Walmart.com to the cloud, partnering with Ford and Postmates to deliver merch to online shoppers, perhaps one day using self-driving cars, introducing free delivery without membership on millions of items, and acquiring online lingerie seller Bare Necessities. Exhausting. And once they’ve done everyone out of a job, who will be shopping online?
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Shoprite You get a car!
Shoprite are at it again, giving away attractively priced vehicles like there’s no tomorrow. This year they’re upping the ante in their annual Win a Car promo, give away no fewer than 150 brand new VW up!s to shoppers who spend at least R100, or buy any of over 50 participating brands, with no limit on entries. Still the Big Kahuna of holiday promos.
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Coca-Cola Ingredients for success
We suddenly live in an age where the words “Coca Cola’s coffee, cannabis strategy” appear in the pages of sober business journals, with no hint of irony or humour. And since you asked, it’s to be legal, safe and consumable, leaving out the psychoactive THC in favour of the apparently “medically-inclined” CBD. Although from a drink originally named for two medicinal ingredients – extract of coca leaves and kola nuts – nothing should really surprise us.
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