Some fairly good news from the Dapper One, whose erstwhile CEO Ian “The Professional” Moir announced last week that sales were up +5.9% for the year through June, or +5.1% if you exclude the movement of the Australian dollah. This, chorus the pundits, is evidence of a turnaround back home rather than Down Under, where sales grew only +1%, and further proof of the strength of Woolies’ legendary food division, which grew +9.8%. The same pundits are also admiring of Woolies’ performance relative to the rest of South Africa’s retailers: the sector as a whole grew just +1.7% in the three months to May. They remain rightly sceptical of the wisdom of further investments in David Jones, on which Woolies is springing over R2bn for the refurb of its 12-storey Sydney retail palace. “Do Australian consumers have that kind of money to do that kind of shopping?” asks the irrepressible Syd Vianello. “There are very wealthy people in Australia. But are there enough of them to support the kind of model that they’re working on?”

Comment: Fair question, Uncle Syd, and one we’ve asked in these pages often enough too.

Did you know that South Africa’s largest food service provider – a company, that is, which provides supplies to the hospitality and catering industries – is none other than Shoprite’s own Checkers Food Services? Well now you do. Having launched at the behest of Whitey Basson in November 2011, the business grew out of its Western Cape heartland to Gauteng in 2016 and then nationally, providing everything from dry goods to fresh meats, cutlery, crockery, equipment, packaging and consumables and wine and liquor. It offers punters a quick turnaround and excellent pricing, as well as a linked business card enabling them to purchase emergency top-ups from any of the Shoprite Group’s retail stores countrywide at a discounted price.

Comment: Heck of a thing. And importantly for the future of the Group as a whole, CFS has pioneered online sales in this space, providing learnings particularly regarding delivery to the business, which has yet to jump in.

News from the country of Africa, where Shoprite and Game are both opening up stores in Kenya in the next few weeks. Shoprite’s first Mombasa store – and its third in-country – will be located in the City Mall complex, and succeeded by another two this year, one in the Karen Waterfront and the second at an undisclosed location. Wherever it may be, this is gangbusters – they only got started in December last year. The Big Red One will be going up against Naivas, with 47 stores, Tuskys, with 60, and Carrefour, and befitting from the troubles of Nakumatt, whose spot at City Mall it is taking over. Game’s third Kenyan store, and its first outside of Nairobi, is soon to open at the Kisumu Mega City Mall, also in a space vacated by Nakumatt, which is moving to cheaper premises upstairs. Kenya is a market ripe for expansion, with a growing middle class, some attractive retail property, and rapidly improving infrastructure.

Comment: A market well worth exploring for any South African business that’s nearing its ceiling back home.

In the United States, both Walmart and posh clothing retailer Nordstrom are building stores where nothing can be bought, but online deliveries may be picked up so you don’t have the needless inconvenience of waiting for a UPS driver to drop your goodies on the front porch for you. A cost saver for such businesses at a time when margins are dropping due to investments in the e-commerce supply chain. Speaking of which, Tesco are cutting plastic bags from their online order deliveries, substituting them with reusable plastic trays at the saving of around 2 tonnes of plastic a year. Sainsbury’s, similarly, are cutting plastic bags from fruit and veg. In Germany, punters are less impressed with home-grown discounters Aldi and Lidl than people elsewhere are: in a burgeoning economy where people are returning once more to pricier options, the discounters are predicted to grow only +2% this year.

Comment: Various powerful forces are currently at play in our sector, and each week brings fresh evidence of their respective impacts.

A disappointing trading update from AVI, who have let it be known that revenue for the Group rose just +1.2% for the year through June, kept down by weak consumer spending and discounting by competitors that the business was unwilling to match. Headline earnings per share are likely to fall to the tune of 4 – 6%, in part because of the restructuring of the Green Cross shoe brand, the value of which has been written down by R87bn. The restructuring itself is estimated to cost around R27m. Also at issue is something called an “unrealised mark-to-market loss” of R13.4m on I&J’s fuel hedges. I&J’s challenges are reflective of the general malaise of a sector increasingly unable to pass its costs onto consumers, at a time when consumers are more inclined to make their decisions based on price alone.

Comment: AVI’s commitment to the footwear business continues to puzzle us, but doubtless they have their reasons.

Last week we mentioned that PepsiCo had put in an offer for Pioneer Foods. We were pretty excited about it, and to a degree we still are, but analysts are proving more sanguine, some arguing that the deal, while big for Pioneer and indeed South Africa, is relatively small potatoes for a player of the scale of PepsiCo, who they argue might be taking a long shot at the time when the rand is weak. “If it doesn't work out it's not going to ruin their balance sheet,” says Stanlib Asset Management’s Kevin Lings. “If it does work out then it's got some nice upside potential that you can build on.” Be this as it may, the deal is worth R24.4bn, the second largest PepsiCo offshore acquisition since it bought Israel’s SodaStream for about R45bn last year. The analysts are divided on whether the deal will mark the beginning of a trend. Some argue that it’s too soon to tell, others that offshore investors enjoy a certain objectivity that goes beyond the headlines and that looks at the underlying numbers.

Comment: The success of a transaction like this would be a significant marker for other businesses considering a flutter, and could yet be the start of something big.

Last week, you will recall, ratings agency Fitch revised the outlook on our long-term foreign currency issuer default rating from stable to negative, affirming it at BB+. In response, the Treasury averred that “government will have to make tough decisions in order to reverse the country's debt trajectory and improve growth prospects”. The bailout of Eskom is clearly putting the wind up observers, with Fitch expecting that the deficit will widen to 6.3% of GDP this year, ahead of the forecasted 4.5%. Moody’s, the only ratings agency which still rates us as investment-worthy, are also a little leery of the Eskom deal, which they see as “credit negative.” In other economic news, Producer Price Inflation slowed to 5.8% YoY in June from 6.4% in May, which may be a harbinger of easing in CPI too.

Comment: That’s a wrap, then. Uncertainty everywhere.