15 of 2024


                            Newsletter No 15/26 April 2024




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Freedom of Movement and Siya Kolisi unveil FOM x Kolisi AW24 Collection


Image supplied

In a fusion of style and substance, lifestyle brand Freedom of Movement (FOM) has announced its latest collaboration with South African rugby icon Siya Kolisi – the FOM x Kolisi AW24 Collection. With vellies, a classic Tee, chinos and a shearling denim jacket in the range, this collaboration underscores the brand’s deeper purpose: fashion as a vehicle for social change.

Since the FOM x Kolisi partnership launch in 2018, proceeds from the sale of each item in the range have gone towards community upliftment projects. FOM’s latest donation of R750,000 towards the latest Kolisi Foundation initiative aims to maintain a meaningful and enduring impact in schools.

In 2019, Kolisi collaborated with FOM to create the Field Green Vellie, a unique interpretation of the iconic South African “vellie” shoe. This partnership was rooted in shared passions for South Africa, local upliftment, authentic design, and the celebration of local artisans and communities. Proceeds from each pair went to the grassing and levelling of the Mbekweni Youth Centre’s rugby field in Paarl.

Another key initiative was the development of the Kolisi Foundation’s inaugural education and sports project, Siyaphakama. The Siyaphakama Zwide Schools Project in the Eastern Cape aims to help township youth become active, positive and healthy contributors to society. The programme focuses on physical and academic education, life skills development, and combating malnutrition and youth unemployment.

While the Siyaphakama project is dedicated to educating and empowering the youth, it also contributes to the overall upliftment and development of the Zwide community and beyond.

 “At the heart of every game and in every stitch of clothing, lies the power to change the world,” says Kolisi. “This collaboration is more than fashion; it’s a movement. With every piece sold, we’re not just wearing our pride on our sleeves, we’re weaving hope into the fabric of communities across South Africa. This range represents our shared commitment to lifting up those in need, proving that together, we can tackle any challenge and transform lives. I believe that providing the youth with support and infrastructure to chase their dreams can ignite hope to pursue their dreams.”

Léan Boezaart, CEO of FOM, adds: “In our collaboration with Siya, we see an opportunity to weave a stronger sense of community. Our core belief is that success is only meaningful when it uplifts others along the way, and we hope that we can inspire South Africans from diverse backgrounds to collaborate in fostering change, and helping our country.”

“Understanding the power of sport to bring a nation together, we also recognise the significant role businesses of all sizes play in community upliftment and in paving pathways for the next generation, whether they shine on the rugby field or in the entrepreneurial world. Our ambition with this initiative is to spark a wave of inspiration across South Africa, encouraging others to contribute positively and collaboratively towards transforming our nation,” concludes Boezaart.   









Fashion retailer or investment company? It’s not that clear-cut

By Marc Hasenfuss

Picture: Supplied

The group is a work in progress and, despite the constrained economy, remains cash generative

Rex Trueform (Rextru) is one of the JSE’s great transformation stories. Back in the 1980s the group, started and then controlled by the Shub family, took an inspired decision to supplement its core clothing manufacturing operations with a factory store to sell garments to the public.

This proved lucrative, and soon the Queenspark fashion retailing brand was being expanded to new locales. So, unlike the many other JSE-listed clothing manufacturers that unravelled when the flow of imported cheaper clothing could not be stanched, Rextru had a new lease of corporate life.

Fast-forward to the present, and Rextru — now under the control of BEE pioneer Marcel Golding — is undergoing another transformation. The reliable cash flows from the Queenspark chain are being harnessed to build out a broader investment vehicle, which now also takes in specialist media operations, property development and water services.

It’s early days with regard to the morphing of these with the fashion retailing interests that are still generating the bulk of Rextru’s keep.

But it is interesting to try to slap a value on Rextru, which has highly illiquid ordinary shares and slightly more liquid (but low-voting) N shares.

Do investors still compare Rextru to other fashion retailers, or is it now more appropriate to look at the group as an investment holding company? 

IM suggests that both measures are appropriate for those who are willing to test their patience by trying to pick up meaningful lines of Rextru stock and take a longer-term view of the company’s new diversification strategy.

If there is a tendency to view Rextru as an investment company, the stated NAV of R20.50 — which is a tangible measure stripping out a smidgen of goodwill — is a key figure. That means the most recently traded N share price is discounting intrinsic NAV by 25%.

A few years ago that might have been par for the course for an investment holding company, but these days discounts applied to intrinsic NAV on the JSE are a lot wider. A lot.

Remgro, the doyen of investment holding companies, is now trading at close to a 50% discount to intrinsic NAV. Other smaller investment counters, which probably provide a better comparison with Rextru, are at similarly wide discounts, most notably Brimstone, Trematon and Brait.

If investors still consider an “operational value” for Rextru as more appropriate, it becomes much more interesting.   

Revenue generated from Queenspark, which has now stretched to 102 stores, crept down 1% to R383m. This is not entirely unexpected, considering slack consumer demand in the higher interest rate environment and the dour overall economy. The gross margin sank to 46.1% from 48.5%, the drop in gross profit being limited to 5% at R177m. But net profit slumped from R52m to just R8m.

Directors’ commentary accompanying the interim results does not explain the collapse in net profit at Queenspark, but the income statement suggests a marked increase in operating costs, which might, at least partly, stem from the opening of nine new stores. Hopefully, these new stores will chip in with profits for the second half.

The property segment presents a happier picture, with revenue up 33.9% to more than R41m (2022: R30.8m). However, this was driven by the fairly recent acquisition of a 51% interest in Belper Investments (which owns five industrial properties in Epping, Cape Town) and the acquisition of an industrial property in Epping. This segment realised a net profit after tax of R8m (2022: R7.6m).

The media and broadcasting revenue increased by 3.6% to R58.3m but yielded markedly lower net profit after tax of R2.2m (2022: R5.3m). Rextru’s water infrastructure investment yielded an equity-accounted profit of R4.3m and a net profit after tax of R7.6m.

IM suspects that under current conditions, Rextru would be hard-pressed to achieve much more than another 100c a share in headline earnings in the second half. This would put Rextru on a forward earnings multiple of 7.5 — which, though modest, is richer than the traditional low single-digit multiple placed on the share in recent years.

That said, history will show that Rextru’s fashion retailing segment has had its ups and downs, and probably more ups than downs. And when it repairs margins, the effect on profitability is quite pronounced.

The important factor is that the group remains cash generative, with operating cash flow of nearly R90m, equivalent to more than 400c a share. Cash on hand sits at R65m, or about 300c a share.

In other words, there is no real stress on the balance sheet if the recently acquired media assets, like Telemedia, take a little longer to deliver on promise.

While Rextru remains an interesting work in progress, there is no real incentive for rushing into the share. In fact, considering the jaundiced sentiment reserved for small caps, Rextru might offer better value down the line.  









An ice-breaking bucket bag

Image: Judd van Rensburg

Why should jewellery have all the fun?

Jimmy Choo Bon Bon crystal-embellished bucket bag.
Why should jewellery have all the fun?





Celebrate Freedom Day at Kuier@TheCastle

A unique celebration of creativity and culture in the heart of Cape Town

The Craft + Design Institute (CDI), in partnership with the Castle of Good Hope, invites Cape Town locals and visitors alike to celebrate Freedom Day by joining in the spirit of Ubuntu on 27 April at the Kuier@TheCastle market.

Kuier@TheCastle is the Cape Town CBD’s biggest new monthly market and showcases a diverse array of Cape Town’s creative talent against the backdrop of one of the country’s eminent cultural tourism attractions. Through a huge array of creative artisans, the market celebrates local heritage and provides a boost to local small businesses from across the city and its surrounding areas.

On Saturday, April 27th, from 9am to 4pm, the market offers a unique opportunity to commemorate 30 years of democracy in South Africa.

“Kuier@TheCastle offers a multifaceted experience with various local artisanal products, culinary delights, and entertainment designed to cater to all the senses,” says Erica Elk, Group CEO of the Craft + Design Institute. “We are inviting people to come and experience the magic within the Castle, one of the oldest and most significant heritage sites in South Africa, as we celebrate the spirit of freedom and unity.”

Named after the vibrant local expression ‘Kuier’, which embodies the spirit of communal gathering and shared experiences, Kuier@TheCastle is a space where diverse people can connect, engage, and celebrate the extraordinary talents of local artisans.

Calvyn Gilfellan, CEO of the Castle, said: “Our mission at the Castle is to create an accessible space where all are welcome to learn and understand our history and heritage, and to participate in building our shared future in the spirit of Ubuntu.”

Visitors can look forward to an array of experiences for the whole family, including discovering beautiful local artisanal products, local foods, creative activities and workshops for all ages, and live music. All visitors will also have free access to the Castle’s museums on the day.

Over the Easter weekend last month the Kuier@TheCastle market made a significant impact on visitors to the Castle. For the calendar year 2024, this heritage site recorded 2614 visitors over the Easter weekend, compared to 1142 for the same period in 2023. This represents a 128.9% year-on-year increase over the same period. In addition, the market has directly enabled creative businesses to generate revenue of over R400 000, providing a boost to these local small businesses.

Admission to Kuier@TheCastle is free on 27 April for Freedom Day. Safe parking is available inside the Castle via the Darling Street entrance.

Find out more at www.kuiermarket.com





The European Union is Moving to Tackle Fast Fashion Industries

In April 2022, the European Commission announced plans to put an end to fast fashion by 2030 by introducing a mandatory minimum use of recycled fibres and banning companies from sending any unsold clothing and textile products to landfills. Under the new expansion of the EU’s existing eco-design rules, which set down energy efficiency standards for consumer goods such as toasters and washing machines, companies operating in the bloc will be required to include a certain amount of recycled content in their goods, or curb the use of materials that make them hard to recycle





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