Newsletter No. 18   03 June 2016

Woolworths Holdings Limited (WHL) challenges itself to bold, Group-wide sustainability targets

Good Business Journey goals set for 2020

Woolworths Holdings Limited (WHL) is on an ambitious journey of continuous change in the way it does business and has put sustainability at the core of its strategy. Central to this is the setting of sustainability targets for the Group, and WHL is proud to announce its Good Business Journey goals for 2020.

The WHL Good Business Journey (GBJ) was ground-breaking in South Africa when launched in 2007, and aims to reduce the business’ environmental impact and increase its social and economic impact across the entire value chain. The GBJ focuses on improving eight key areas of the business: energy, water, waste, sustainable farming, ethical sourcing, transformation, social development and health and wellness, with over 200 targets supporting this.  The GBJ has also realised R567m in cost savings made through sustainability interventions in the company and its supply chain to date.

GBJ 2020 – New markets, new targets, new initiatives

For the first time, the Group’s GBJ 2020 targets will incorporate the WHL international businesses, including the rest of our African operations, David Jones and Country Road Group, thereby extending the knowledge and experiences gained in South Africa across borders. In Australia, WHL will be introducing formal sustainability scorecards for David Jones and Country Road Group towards the last quarter of the 2016 calendar year, thereby aligning the GBJ programme across all its Southern Hemisphere operations.

The WHL Group GBJ 2020 commitments are a progression of its earlier journey and include:

·         Contributing over R3.5-billion across the Group to communities over the next 5 years;

·         Saving 500 billion litres of water over 5 years;

·         Ensuring the company halves its energy impact by 2020 and achieves 100% clean energy by 2030 ;

·         Driving responsible sourcing of all key commodities by 2020; and

·         Affirming that every private-label product sold has at least one sustainability attribute by 2020.

Ian Moir, WHL Group CEO said:

“Sustainability is at the core of our business and we are very proud of the new targets we’re announcing today.  Since we launched the Good Business Journey in 2007, we have achieved some remarkable milestones, learnt valuable lessons, and set significant industry benchmarks.  Going forward, we also see the opportunity to amplify these positive impacts beyond South Africa through the activation of the GBJ programme at both David Jones and Country Road Group in Australia.”

The GBJ 2020 scorecard incorporates traceability and the development of responsible sourcing strategies for high risk commodities including palm oil, cocoa, sugar, soy, cotton, leather and viscose, It will also incorporate an improved animal welfare rating system and responses, and make significant progress in eliminating hazardous chemical usage across the clothing supply chain.

GBJ 2015 Update –

WHL recently published its GBJ 2015 Report, demonstrating significant progress across the eight key areas.  WHL achieved 87% on its targets for the financial year, and met or exceeded targets in 164 of 200 indicators over the period 2012-2015.

The top 10 GBJ highlights were:

1.   R2.4-billion in value created for South African employees through Woolworths Black Economic Empowerment share scheme.

2.   At least one sustainability attribute for 63% of Woolworths Food products and 60% of Woolworths clothing products.

3.   Woolworths Holdings Limited was the fastest growing retailer in the world in use of organic cotton and yarn.

4.   There has been 41% relative water reduction in Woolworths stores to date.

5.   Energy consumption was reduced by 40% in Woolworths’ stores in South Africa since 2004.

6.   Country Road Group received a B+ rating in the Australian Fashion Report 2016 and David Jones received a B- and was acknowledged as one of 2016’s most improved companies.

7.   Woolworths sold 1.73 million reusable bags in the last year.

8.   R3.4-billion has been contributed to social development initiatives since 2007. Woolworths’ social development contribution was almost R590-million in South Africa last year and AUD$9-million (R90 million) in Australia through David Jones and Country Road Group.

9.   The Country Road Group’s Omni-Fulfilment Centre (OFC) was the first facility in the state of Victoria to receive a ‘5 Star Green Star – Industrial As Built v1’ rating from the Green Building Council of Australia. The facility includes a solar panel installation expected to generate in excess of 20% of the required energy to run the OFC.

10.         Over 93% of waste at Woolworths head office and distribution centres was recycled.

“These goals are bold but achievable with the collaboration and commitment of our colleagues, our suppliers and our customers,” concluded Moir.

My Newsroom

Some more of what to look forward to at Source Africa this year!…..

TUESDAY, 7 JUNE 2016 – 09:00am
Venue: CTICC, Cape Town. Pre-registration required through SACTWU, Etienne Vlok etiennev@sactwu.org.za
Clothing, Textile & Leather Industry Imbizo
Marching onto the global stage: Invigorating our industry through exports
The Imbizo will bring together the industry’s leading thinkers to consider and practically plan how we maximise and grow our export footprint. It will also examine how to overcome challenges to exporting and the support measures that exist to do so. The Imbizo will include case studies from successful exporters (both inside the industry and in the broader economy), inputs from government export agencies, market information from researchers, and export tips from potential customers.

See who will be exhibiting at Source Africa this year!………………

“We look forward to welcoming our valued Clients to our Booth at Source Africa – Stand #S5   Representatives from Brother and Pegasus will be present. Look forward to meeting you.”

Bolton Footwear is one of Southern Africa’s foremost footwear companies. All footwear is competitively priced and manufactured from the highest quality leather and raw material.”

TFG reports first-rate retail results

ond half, full year credit sales growth was up to 5,9% from 4,3% the previous year.

Turnover growth in the clothing merchandise category was 41,8% including Phase Eight (13% excluding Phase Eight)  follTFG (The Foschini Group), the diversified retail group now trading globally in 31 countries, has announced impressive local and international March 2016 year-end results with total retail sales growth of 31,2%.

Excluding the impact of Phase Eight, the international womenswear brand acquired in January 2015, the group achieved retail sales growth of 11,6%, with comparable sales growth of 5,7%.

Headline earnings per share from continuing operations excluding the impact of once-off acquisition costs  increased by 17,6% to 1 055,8 cents per share from 897,9 cents per share last year.  The acquisition costs relate to the acquisition of Phase Eight last year, as well as the acquisition of Whistles in March this year.

A final scrip distribution with a cash alternative of 385,0 cents per share has been declared, an increase of 18,5%.  Accordingly, the total distribution for the year amounts to 691,0 cents per share, an increase of 17,5%, reflecting the growth in the underlying continuing operations.

“Our brands offer broad LSM appeal from value to upper end,” said TFG CEO Doug Murray. “Given our continued focus on cost containment, our ongoing South African and African expansion strategy, complimented by our international acquisitions and growth, we have delivered good returns for our shareholders, despite the tough economic climate and market uncertainty.”

Murray said cash sales growth was stronger in the second half of the year, resulting in full year cash sales growth of 18,4% (including Phase Eight: 59,8%).  Although credit sales growth was slightly slower in the secowed by homeware and furniture 11,7%, cosmetics 9,2%, cellphones 7,4% and jewellery 7%.

Total same store turnover (excluding Phase Eight) grew by 5,7% while product inflation averaged approximately 8%.

The group’s overall gross margin has improved from 47,3% to 49,7%, mainly due to the higher Phase Eight clothing margin.  The margin in all other product categories remained consistent with the previous year.

Continued focus on cost control has resulted in expenses increasing by 9,4% for the year, excluding Phase Eight.  “We remain committed to ensuring that our costs are well controlled, while maintaining our investment for future growth,” said Murray.

South African and Africa expansion

In line with its strategy of being the leading lifestyle fashion retailer on the African continent, TFG increased its reach by 209 stores in South Africa and the rest of Africa, and closed 27.

TFG currently operates out of 2 462 stores on the African continent and plans to open in excess of another 150 stores within the next 12 months which will increase their African trading space by approximately 6%. “We have achieved this for several years and are confident this will continue because of the diversity of our offerings,” said Murray. “We have a comprehensive stable of brands, at different levels of maturity, and many are not yet fully represented in shopping centres. “

The group currently trades out of 176 stores across six countries in the rest of Africa.  These stores, with the exception of Namibia, traded well during the year with turnover growth of 31,6% and same store turnover growth of 14,6%.  Including Namibia, total turnover growth in the rest of Africa was 16,6%.

International expansion

The upmarket Phase Eight brand, with its headquarters in the UK, now trades out of 542 outlets in Europe, Asia, the Middle East, Australia and America, with 108 outlets opening during the year and 10 closures.

“Phase Eight has met our expectations and all our strategic targets that we set for the year and good progress has been made with the integration of this business. We plan to open at least 50 more outlets this financial year.”

Iconic men’s and women’s fashion brand Whistles which was acquired at the end of March 2016 currently trades out of 121 outlets in the UK and internationally, both through stand-alone stores and concessions in department stores such as Harrods and Bloomingdales as well as online. TFG intends opening 20 more Whistles outlets this year. (As the Whistles acquisition was at the end of TFG’s financial year, these results do not include any trading relating to the brand. However, their at-acquisition balance sheet has been consolidated as at 31 March 2016.)

13,6% at the previous year-end, and from 14,0% at the half-year, very much within management’s expectations.  The retail debtors’ book is adequately provisioned at 13,2%, down from 13,6% at the previous year-end.

“It remains our intention to bring our recourse debt-to-equity ratio from its current value of 55,6%, closer to our medium term target of 40%,” said Murray.

The group anticipates continuing strong cash sales growth, but remain concerned about the impact of the introduction of affordaExcluding Phase Eight, TFG was operating out of 2 462 stores at the year-end, an increase in trading area of 6,6%.

Online expansion

E-Commerce is now a material contributor to TFG sales, and the omni-channel roll-out continued during the year with the addition of sports division brands Totalsports, Duesouth and Sportscene.  This has proved very successful, said Murray, and Foschini cosmetics, @home furniture, Markham and Fabiani will be added to the online offering this year.

Credit

Credit turnover growth slowed in the second half to 5,1% (from 6,8% in the first half) resulting in full year credit turnover growth of 5,9%, up from 4,3% at the previous year-end.

The retail debtors’ book of R6,7 billion has increased by 8%.  Net bad debt reduced by 7,4% compared to an increase of 9,4% in the previous year, following the group’s continued investment in credit analytics and capabilities.

Net bad debt as a percentage of closing debtors’ book reduced to 13,4% frombility regulations on their ability to open new accounts which will put pressure on credit sales.  This challenge is being addressed by streamlining the in-store and call centre application process, supported by technology to make opening an account as seamless as possible.

“The outlook for both the global and domestic economy remains challenging and uncertain,” said Murray, “but our previously reported strategic objectives around growth, profit, customer and leadership remain appropriate.

“Excluding Phase Eight and Whistles, the turnover growth for the first seven weeks of the current financial year is at similar levels to last year and broadly in line with management’s expectations.  Both Phase Eight and Whistles are trading ahead of last year and within management’s expectations.

My Newsroom

*****************************************************************************************************************************