A grave trading update from the Men In Black, who have let it be known that they are expecting losses of between R530 to R550m for the six months through June once the final reckoning is done, having achieved headline earnings around R204m last year. This on the back of losses totalling between R395 and R425m over at the troubled Massdiscounters division, where there has been a staffing shakeup, with Albert Voogd out as CEO, Andrew Stein in as interim, Riaan Turton as FD and Kathrine Madley and Neville Hatfield as marketing and merchandising directors respectively. The Masscash division is likely to report a trading loss of between R180m and R210m, blaming like Massdiscounters a downturn at the lower end of the market. CEO Kevin Vyvyan-Day is handing the reins over to Deepa Sita as interim. Group wide, say Massmart “much of the lower profitability is caused by the soft sales, margin pressure from the lower sales participation of general merchandise and expense growth caused partly by the new Makro store opened in Durban North in March.”

Comment: Troubling stuff. We look forward to the turnaround of which we know this great South African business to be more than capable.

By contrast with Massmart, Shoprite have delivered a humdinger of a trading update, given the constraints of the current economy, with South African supermarket sales up +7.4% for the second half of the year through June, compared with +2.6% in the first half, and a banging +9.4% for the final quarter, for a total of +4.9% for the year. Group wide, sales were up +3.2% for the full year, with non-SA supermarkets down -7.7% and Angola tanking to the tune of -38.4%. First half performance, say Shoprite, was impacted by the completion of its ERP replatforming. “However, the continued improvement throughout the second half is pleasing,” says the sanguine CEO Pieter Engelbrecht, “and product availability now surpasses pre-system implementation levels.” He’s also pretty stoked with the gain in market share, “testament to our core South African business being back to full operational strength,” he says.

Comment: By Shoprite standards, a rocky start to the year. But what a comeback.

Pick n Pay’s Chairman Ackerman the Younger has always been something of a (youthful) elder statesman of the industry, a spokesman on pressing matters of common concern, a liaiser with government, an appealer to the better angels of our aisles and DCs. And good on him for it: that’s one of the reasons we have chairpeople. So it was on taking the podium at the AGM last week he had some stern, if tactful, words for the government on the issue of competition in the industry and reporting standards. On the former: “We were concerned to read in late May of the findings of the Competition Commission inquiry into the retail sector. We have engaged extensively and constructively with the Inquiry team and will continue to do so. This includes areas where we believe that their findings are based on errors of fact or interpretation, and where their draft recommendations would damage the interests of consumers.” On the latter: “An increasing amount of management focus — which could be better deployed elsewhere — has now to be diverted to satisfying an excessively detailed approach by the regulators to the reporting of financial and performance metrics.”

Comment: A measured response and one which may see the industry gain some traction in these areas.

Precious little on the international front this week, except that Lidl are taking France by storm as they have almost everywhere else. It’s the fastest-growing retailer there, with 6% share of a mature market. However, market leader E.Leclerc continues to hold its ground against the upstart discounter, even as Carrefour and Casino lose share, to the tune of 0.3 and 0.7 percentage points for the last quarter respectively. The two are rumoured – just rumoured – to be in merger talks, presumably in the hot Paris afternoons, in the pleasant cool of Carrefour’s Marais apartment, before sharing a moody post-discussion Gauloise. Back home again, Woolies are under fire for again impairing the value of David Jones, to the tune of R223m, despite saying they wouldn’t, on top of the R4.35bn they’d already written it down by. Finally, Freshstop, SA’s largest convenience retailer, has just launched an app-based cashback rewards programme, giving shoppers actual money in their bank accounts when they purchase items at one of the more than 300 FreshStop at Caltex stores nationwide.

Comment: Game changer for Freshstop. Nice one, Lidl, stay away from SA why don’t you? And Woolies: get rid of David Bleeding Jones. The fallacy of the sunk cost is the first thing you learn at business school.

Sugar is taking strain, as the government’s tax on sugar in soft drinks sees manufacturers replacing the sweet and crunchy stuff with artificial sweeteners, and makes itself felt in the windy cane fields of KZN’s North Coast. According to a survey of the 24,000 farmers of the SA Canegrowers Association, as many as 10,000 jobs were lost between 2016 and 2018, some of them to be sure as a result of cheaper imports from Brazil and Eswatini, but a significant number as a result of the tax. “The sugar tax is a structural blow to the industry: it has permanently taken out between 20% and 25% of the local demand,” says Illovo Sugar MD Mamongae Mahlare, who points to the fact that sugar sales in the Beloved Country have dropped from 1.5 million tons annually to 1.1 million in just a few years. Some farmers have managed to diversify into crops like vegetables, macadamia nuts and ethanol; this is challenging for the smaller-scale farmers who make up the majority of SA’s growers. In other sugar news, Tongaat Hulett is delisting form the London Stock Exchange to save costs in this period of embattlement.

Comment: Tough times in one of SA’s trickiest industries.

Not much happening on the home front, so let’s look abroad. Sales of L’Oréal products have declined -1.1% in the US in the second quarter as the hysteria around beauty bloggers and makeup-demonstrating teens on Instagram loses some of its shriek and punters return to a more natural look. “We are really over-relying on makeup,” laments CEO Jean-Paul Agon. “We really intend to bounce back in the US, but it may take some time.” We hear your pain J-P. There was a time when we, too, over-relied on makeup, and bouncing back was hell. Proctor & Gamble in the meantime have reported a quarterly net loss of $5bn, substantially as a result of an $8bn write-down of the value of Gillette, the victim of johnny-come-latelies like Dollar Shave and Harry’s, and of course of the seemingly unstoppable return of the beard. And finally, British American Tobacco saw half-year sales rise by +6.6%, substantially as a result of vapes and e-cigarettes and what have you, which have convinced a new generation of teens that smoking is cool, and not as bad for you as cigarettes. This is a business model we wish Big Oil would discover, except with wind turbines and solar.

Comment: Three industries, three big changes. Truly we live in a time of wonders.

Not a great week for the economy, with Eskom posting a record loss of R20.7bn for the recent financial year, and unemployment hitting an 11-year high of 29%. And then the Reserve Bank, Moody’s, the International Monetary Fund and Fitch revised our growth forecast to well below 1% for the year. With the government embroiled in the tedious squabbling that has characterised the ANC since it came blinking out of exile (and who knows? Maybe before as well) others are weighing in. What we need, says Herman van Papendorp of Momentum Investments, is better politics, easier tourist visas, more broadband, and a reduction in rail and port charges. What we need, says Rekang Jankie from the Alternative Information and Development Centre, is jobs. “We can create one million climate jobs,” she says. “Specifically: 250,000 renewable energy jobs, 390,000 public transport jobs, 200,000 construction jobs and 100,000 agriculture jobs and 110,000 jobs in waste, industry and education.”

Comment: Both approaches sound worth a try.