Newsletter No. 01 / 22 January 2021 We are currently updating the Sourcing Directory for 2021. Please click below to see what it is all about. If you want to upgrade your l liner to a business or business logo listing or an advertisement, please let us know by end Jan. This is our first newsletter for the year! Here’s hoping that 2021 is kind to us all. Click on any ad to go to the advertisers website.. African Union sets AfCFTA trading deadlines The African Union (AU) Commission has approved the duty‑free trading of goods under the African Continental Free Trade Area (AfCFTA) agreement, starting on 1 January 2021. The decision to commence was made on 5 December during an AU virtual summit. Cyril Ramaphosa, the current AU Chair and South African President said that the AfCFTA is expected to improve intra‑African trade, boost industrialisation and competitiveness, create regional value chains and help in job creation. Those countries not prepared for trading under AfCFTA rules from January must still ratify their AfCFTA agreements and submit tariff offers by 30 June 2021. Currently, all of Africa’s states, except Eritrea, have signed onto the AfCFTA; 34 have so far ratified it; but only 10 countries have so far both ratified it and submitted tariff offers: these countries are Chad, the Republic of Congo, Egypt, Equatorial Guinea, Eswatini, Gabon, Mauritius, Namibia, Sao Tome and Principe, and South Africa. The AU summit also set 30 June 2021 as the deadline for finalising negotiations on the rules of origin for the remaining 19% of tariff lines not yet agreed upon. The same deadline also holds for countries to submit their offers for liberalising trade in business services, communications, finance, tourism and transport; with offers on other outstanding service sectors to be submitted by 31 December 2021. The leaders called for member nations to prioritise liberalising the health and education service sectors, due to the demands created by the current Covid-19 pandemic. Ramaphosa also urged the AU to consider establishing a Protocol on Women in Trade, to give African women more access to trade opportunities. AfCFTA Secretary‑General Wamkele Mene said women, young Africans, and small and medium enterprises should be at the centre of AfCFTA’s implementation to make it inclusive; and to ensure shared growth across the continent. Textile Excellence Kenyan Manufacturers’ Body releases standard procedures The Kenya Association of Manufacturers (KAM) has released a new set of standards intended to improve the efficiency and accountability of importing into Kenya. KAM said that it has created the new Standard Operating Procedures (SOPs) guide, to facilitate trade and boost the fight against illegal imports in order to enhance the ease of doing business in the country. The SOPs are intended to serve as a reference for all government bodies assigned to ensuring efficiency and accountability in the inspection, verification and clearance of imported goods at Kenya’s ports and other entry points; as well as a guide for those involved in importation. The standard procedures embrace stakeholders such as freight consolidators, clearing agents, importers, the Kenya Airport Authority, the Kenya National Chamber of Commerce and Industry, shipping lines, PVoC agents, and KenTrade. There are also 29 industry bodies and government departments listed that are affected by the procedures cited in the SOPs document. These include such government authorities as the Kenya Revenue Authority; Kenya Ports Authority; the Ministry of Industrialisation Trade and Enterprise Development; the Department of International Trade; the Kenya Bureau of Standards; and the Kenya Railways Corporation. The guide lists operating procedures, from pre‑shipment through inspection at ports of entry and subsequent cargo clearance, along with examples of international best practice and recommendations. The document’s foreword states: “Over the years, several importers have cited increased challenges faced during the importation process including: congestion at the ICDN; re‑inspection of cargo that has already been subjected to Pre‑Arrival Clearance in accordance with the PVoC Program; lack of harmonisation and configuration of the HS Codes used under the iCMS and KESWS systems; and the invalidation of import classifications at various ports/points of entry by customs officials, leading to delays in customs clearance and increased costs of importation.” Textile Excellence TFG – trading update The devastating impacts of the COVID-19 pandemic continue to be felt across the globe. Many countries, including our three main territories, South Africa, the United Kingdom (UK) and Australia, are experiencing second waves of the pandemic, with governments in these countries being left with no alternative but to impose further lockdown restrictions to protect its citizens and curb the spread of the virus. In South Africa, the country reverted to adjusted Level 3 restrictions from 29 December 2020. In the UK, following the second national lockdown from 5 November to 2 December 2020, a third national lockdown was announced on 4 January 2021. In Australia, different states and territories have different levels of restrictions based on the specific number of positive cases in each region. While the government-enforced lockdowns are required to protect peoples’ lives, they also impact the countries’ economies, increase unemployment, place further strain on already impacted consumers and force store closures. Despite the ongoing challenges described above, the Group continued seeking growth opportunities, and acquired the Jet business in South Africa, effective 25 September 2020 and the Jet businesses in Botswana, the Kingdom of Eswatini, Lesotho and Namibia at various effective dates in December 2020 and January 2021. Consequently, the results below include Jet, unless otherwise indicated. Group performance update Online turnover for the Group continued to excel with growth of 32.3% (TFG Africa: 114.1%) for Q3 FY2021 compared to the same period in the previous financial year. For the nine months to 26 December 2020, total Group turnover declined by 13.3% compared to the same period in the previous financial year (excluding Jet: -17.5%*) due to the impact of lockdowns in April and May in all our countries of operation, and subsequent periods of lockdowns in the UK and Australia as previously reported. Group cash turnover declined by 7.9% compared to the same period in the previous financial year, contributing 78.2% (comparable prior period: 73.6%) to total Group turnover for the nine months to 26 December 2021. * Pro forma management account numbers used to calculate an indicative turnover growth Group online turnover grew by 28.2% (comparable prior period: 2.9%) for the nine-month period, contributing 12.0% (comparable prior period: 8.1%) to total Group turnover. Continued focus on cost control has ensured that trading expenses for the nine months remain well below the comparable prior period. The Group’s debt equity position continues to improve owing to strong cash generation, working capital optimization, deliberate paying down of debt and the successful rights offer concluded in July 2020. Jet Shareholders are hereby notified that since our interim results announcement on 5 November 2020, we have also successfully concluded the acquisition of Jet in Botswana (14 stores), the Kingdom of Eswatini (6 stores), Lesotho (8 stores) and Namibia (15 stores) following the fulfilment or waiver, as the case may be, of all the conditions precedent in respect of the transactions in the respective countries. Strategic update confident that our strategic investments, both previous and current, into digital transformation; e-commerce platforms; vertical quick response local supply chain capacity; and product, brand and category diversification, will continue to benefit the Group into the future. We will continue to adapt and strengthen our business through continued prudent cost savings measures and the responsible management of cash resources and liquidity in response to the uncertain trading environment, whilst prioritising measures to protect our employees, customers and other stakeholders. Pro financial information Jet turnover for the period 25 September to 26 December 2020 relating to the acquired Jet stores were removed as if the acquisition did not take place. This pro forma information, because of its nature, may not be a fair reflection of the Group’s results of operations, financial position, changes in equity or cash flows. There are no events subsequent to the reporting date which require adjustment to the pro forma information. Pepkor – distribution of circular Shareholders of the Company (“Shareholders”) are referred to the small related party transaction announcement published by the Company on SENS on 18 December 2020 in terms of which Shareholders were advised, inter alia, that the Company and two of its wholly- owned subsidiaries have entered into agreements to: Shareholders were advised in the aforesaid SENS that the issue of the Pepkor Consideration Shares to the Steinhoff Subsidiaries in terms of the Transaction requires approval by the Shareholders as a special resolution in terms of section 41(1) of the Companies Act No. 71 of 2008 (“Companies Act”) as a result of the fact that the Steinhoff Subsidiaries are related or inter-related to the Company, as contemplated in section 2 of the Companies Act, and that such approval would be sought as a written resolution of Shareholders in terms of section 60 of the Companies Act. Distribution of circular Important dates and times Truworths – business update Truworths International Ltd. (the ‘Group’) announce that both of its main markets, South Africa and the UK, continue to be affected materially by the impact of the COVID-19 pandemic. While there have not been any further hard lockdown restrictions in South Africa since the Group was allowed to reopen its stores in May 2020, consumer spending remains subdued in the wake of the ongoing economic crisis resulting from the severe negative impact of the pandemic, and generally depressed economic conditions. In the UK, trading conditions have been exceptionally challenging amidst Brexit uncertainty, with the Group’s stores having to close from 5 November 2020 to 2 December 2020 (except for ‘click & collect’ orders) as all non-essential retail activity was suspended in an attempt to curb the spread of the virus. The government has again imposed a national lockdown in January 2021 forcing the Group to close its stores in the UK. Group retail sales for the 26-week period ended 27 December 2020 (the ‘current period’) decreased by 8.5% to R9.7 billion relative to the R10.6 billion reported for the 26-week period ended 29 December 2019 (the ‘prior period’). Account sales comprised 51% (2019: 52%) of Group retail sales for the current period, with account sales decreasing by 10.3% and cash sales decreasing by 6.5%, relative to the prior period. Truworths Africa Retail sales for Truworths Africa (being the Group, excluding the UK-based Office segment and comprising mainly of the Truworths businesses in South Africa) decreased by 6.8% to R7.3 billion relative to the prior period’s R7.8 billion, with account sales decreasing by 10.3% and cash sales increasing by 1.9%. Account sales comprised 68% of these retail sales (2019: 71%). Trading space decreased by 1% relative to the prior period and is expected to remain unchanged for the 2021 financial year. There was no product inflation (or deflation) in the current period (2019: 1.1% inflation), while like-for-like store retail sales decreased by 8% (2019: increased by 1%). Gross trade receivables in respect of the Truworths Africa debtors book (relating to the Truworths, Identity and YDE businesses) were at R5.8 billion (2019: R6.8 billion), while the number of active accounts decreased by 6% to 2.6 million. Active account holders able to purchase and overdue balances to gross trade receivables were at 85% (December 2019: 85%, June 2020: 77%, and October 2020: 83%) and 12% (December 2019: 10%, June 2020: 20%, and October 2020: 15%) respectively, evidencing the signs of improvement in the overall quality of the book since June 2020 as announced in November 2020. Office Retail sales for the Group’s UK-based Office segment decreased in Sterling terms by 24.6% to GBP114 million relative to the prior period’s GBP151 million. In Rand terms, retail sales for Office decreased by 13.3% to R2.4 billion. Office continues to benefit from its strong online presence, with online sales contributing approximately 59% (2019: 34%) of retail sales for the current period. Trading space for the Office segment decreased by 17% relative to the prior period and is expected to decrease by approximately 21% for the 2021 financial year. Earnings Amidst these challenging trading conditions, the Group estimates that its headline earnings per share (‘HEPS’) for the current period will decrease by between 4% and 9% to between 332 cents and 350 cents relative to the prior period HEPS of 364.9 cents. The Group further estimates that its earnings per share (‘EPS’) for the current period will decrease by between 14% and 19% to between 295 cents and 314 cents relative to the prior period EPS of 364.7 cents. The higher decline in EPS compared to HEPS is attributable to an impairment of GBP8 million in the current period of Office’s right-of-use assets in respect of retail store leases, as lockdown restrictions on non-essential retail in the UK and Europe continue to put pressure on store-based retailing. Shareholders are advised that this business update does not constitute an earnings forecast, that the financial information provided herein is the responsibility of the directors, and that such information has neither been reviewed nor reported on by the Group’s external auditors. The Group’s interim results for the 26-week period ended 27 December 2020 are scheduled for release on or about Thursday, 18 February 2021. Pick n Pay – CEO to retire Pick n Pay Chairman, Gareth Ackerman, announced that, after successfully leading the business for eight years, Richard Brasher will retire as CEO with effect from 21 April 2021. Following a comprehensive local and international search, Richard will be succeeded as CEO on that date by Pieter Boone, former Chief Operating Officer of Metro A
“Fast fashion brands like Fashion Nova, Boohoo, Revolve, Pretty Little Thing and Forever 21 all score less than 10% on the Fashion Transparency Index” (Fashion Transparency Index, 2020) Sustainable fashion cannot exist without transparency. Transparency is a key precondition for industry action to eliminate human rights violations, treat workers and communities with respect and eliminate or reduce pollution and unsustainable resource use. You should be suspicious of any brand that is not prepared to fully account for where and how it makes the clothes it wants you to buy. Of course transparency by itself is not enough – we need brands to commit to high standards and effective assurance systems to know if brands and their suppliers are actually delivering on their commitments. |
To Advertise….. Click here to see fact sheet with advertising rates.
Editorial Submission:
Please remember to send me your news so that we can share it with all our readers in the weekly newsletter. Although editorial is neither guaranteed nor implied, suitable editorial for consideration may be submitted to:-