
THIS ISSUE: 08 Nov - 14 Nov
Great results down below from SPAR, and some pretty big news too. Good numbers from Rhodes Food Group, as well, but not sadly from StatsSA, who tell a troubling tale about the state of retail right now. Elsewhere in your Tatler: rumblings against the continued tenure of Christo Wiese in the Shoprite chair, and a massive acquisition that could transform pharmacy globally. Enjoy the read.
RETAILERS AND WHOLESALERS
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SPAR A Polished performance
A very tidy set of results indeed from among the green hills and deep shaded valleys of KwaZulu-Natal. SPAR Southern Africa – the only listed SPAR globally, ahem – grew turnover +8.4% to R109.5bn for the year through September, with operating profit up +7.2% to just shy of R3bn, and diluted HEPS up +9.9%. Wholesale turnover was up +8%, with TOPS once again shooting the lights out, growing +17.6%. Ireland reported a strong performance and Switzerland a vast improvement in the second half of the year over the first. House brands – “as good as the best for less” grew +10.1% to R13.4bn, and now account for 23.3% of wholesale turnover. On the wholesale side, the number of cases through DCs was up +5.3% to 243.9 million, and solar plants will be operational in all six SPAR DCs in South Africa before the end of the year. The Group also reports (significantly, in the light of the next story) that its retailer loyalty rates remain high. The really big news, though, is that they’ve formalised the acquisition of Polish retailer Piotr i Paweł, consisting of 66 supermarkets and a DC, at a princely consideration of €1. See more on these numbers and what they mean right here
Comment: The continued expansion of SPAR into new geographies is perhaps the biggest story in South African retail right now. Nice one. Good results, too.
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SPAR Owed on a Grecian Earn
If you can get to the bottom of the dust up between SPAR and the Giannacopoulos family, call us, and we’ll send a rope down. Last we heard, the family, which owns 41 stores, had been handed back control of the businesses in both the Pietermaritzburg and Pretoria High Courts. SPAR have subsequently revoked the family’s membership of the SPAR Guild, and with it their de facto ability to trade under the SPAR brand. Briefly, SPAR have argued that the Giannacopouli have in various ways brought the SPAR brand into disrepute; the Family G. contend that SPAR is merely angry that they have been procuring merchandise elsewhere for less than would pay at the local DC. Some observers believe that the entire conflict results from a clash of personality between the family and a couple of SPAR directors.
Comment: We have worked with SPAR, and even attended some of their membership events, in an observer capacity. It strikes us that the Guild members satisfied with the Group out number any dissidents by several orders of magnitude.
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Shoprite A seat at the table
We mentioned in passing last week that at the AGM, Christo Wiese had regained his spot as Shoprite chair. We didn’t tell the full story. No longer everyone’s favourite uncle, he garnered, if that’s the word, only 38.8% of ordinary votes, but because of the high-voting deferred shares under the control of his own Thibault Square Financial Services, the resolution passed. And there’s more: last week, it was announced that the respected Professor Shirley Zinn, tasked this past year with reforming Shoprite’s remuneration policy, sometimes against some pretty stiff headwinds, would resign as lead independent director. For, ahem “personal reasons.” Are these developments related? “Shareholders are not prepared to pay for (Wiese) to go away, but also don’t want him to stay and keep control,” says one analyst.
Comment: While Shoprite seems operationally sound, Oom Christo now has baggage. And the boardroom table is creaking under its weight.
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International Retailers Clothed in shame
Posh retailer Marks & Spencer have seen clothing and home sales fall by -5.5% for the first half, dogged by availability and supply chain issues. Food sales, in the meantime, have risen by +0.9%. The business is in the midst of a reinvention of sorts, closing underperforming stores and attempting to kick-start a home delivery business through its partnership with online grocer Ocado. Across the pond, meanwhile, Stefano Pessina, CEO of Walgreens Boots Alliance (and in the US these days Walgreens can be a disturbingly literal descriptor) might be looking to take the business private. He already owns 16% of the Group, and a $70bn buyout would be right up his alley. Next stop, apparently, China.
Comment: A delisting of Walgreen’s would launch Signor Pessina into some white and gleaming stratosphere, smelling of aspirin and antibacterial hand wash.
MANUFACTURERS AND SERVICE PROVIDERS
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Rhodes Food Group Rhodes to riches
Nice work from Rhodes Food, which has let it be known that it expects its annual earnings to rise somewhere between +35 and 45% from last year’s headline earnings of R159.1m, assisted thither by an income tax rebate of R10m (Who’s their accountant? Ed.), although the R14m relocation of their pulps and purées plant from Wellington to Groot Drakenstein did sting a little. Rhodes, which owns great South African brands Bull Brand, Magpie, Ma Baker and Pakco, also mentioned its turnover during the period had increased by +8.2%. In the regional segment of the business, long life foods, which include canned fruit, jams, vegetables and tomato products, increased turnover by +9.1% and fresh foods by +6.7%, while international turnover grew by +8.8%, assisted in part by the travails of the dear old ZAR.
Comment: A solid business increasing its footprint and making its mark.
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AVI Simplot the best
Doing what any sensible business would do with an Antipodean asset (coughwoolworthscough), Anglovaal Industries Limited (pronounced as always in the plummy tones of one enjoying a post-prandial snifter at the Illovo) is selling its 40% interest in Australia-based seafood and snack manufacturer Simplot for R633m. This in keeping with AVI’s strategy of bailing from businesses over which it has limited strategic control, which makes a weird, circular sort of sense. The sale will realise a net capital gain of around R370m for AVI, which will continue to sell seafood to Simplot. In other AVI news, the business anticipates that earnings per share will rise somewhere in the order of 35-45% for the six months through December, which can’t possibly be just around the corner, can it?
Comment: A shrewd move by a solid business whose only real eccentricity is its continued and not particularly profitable ownership of footwear business Greencross and A&D Spitz.
TRADE ENVIRONMENT
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Retail Trade Sales Lies, damned lies, and retail trade sales
In all the excitement of the past couple weeks, we’d forgotten that September’s retail sales numbers were barrelling towards us like an out of control truck belonging to a maverick independent cash ‘n carry group, down one of those seemingly endless hills in the Eastern Cape…. where were we? Ah yes. Overall, the bearded sages over at StatsSA inform us, they were up just +0.2%, the lion’s share of that coming from “retailers in textiles, clothing, footwear and (ahem) leather goods”, who grew by +3%. There has been a pretty steady decline overall since May’s high of around +2.4%. Our own great industry, under the sobriquet “food, beverages and tobacco in specialised stores” saw sales diminish by -2.3%, while “pharmaceuticals and medical goods, cosmetics and toiletries” grew +0.8%, and “general dealers” shrank -0.7%.
Comment: Not the result we were hoping for then. But Black Friday is coming, we’re told, so that should give us a little bump and keep the wolves from the door.

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