Newsletter No 20 / 4 June 2021
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Performance brand 2XU strikes up new distribution partnership in SA
Poseidon has been appointed as the new distribution partner for international sportswear brand 2XU in South Africa. Poseidon’s parent company Ares Group welcomes 2XU into the stable of brands it distributes, which includes footwear and apparel brand, Under Armour.
2XU is an Australian/New Zealand multinational corporation engaged in the design, development and selling of sportswear and performancewear – mostly compression garments for sports such as triathlon, cycling, running, open water swimming, and physical fitness.
Although the 2XU brand has been available in South Africa since 2013, the appointment of its new distribution partner gives 2XU a platform for extensive expansion, through both DTC and wholesale trade partnerships, according to Ares.
Local product focus
The product selection in the SA market is focused on three key areas: compression, tri suits and various multisport accessories including compression calf guards and open water swim accessories such as goggles, silicone swim caps and timing straps.
“It’s really exciting to be adding 2XU to the Ares stable of performance brands. The brand offers unrivalled technical excellence which is paramount to athletes performing in SA and is deep within our DNA at Ares. For the initial seasons, we are focusing on the sharp point of the brand, namely compression and triathlon, before expanding into the additional technical categories,” says Gareth Kemp, managing director at 2XU.
“2XU fills a much-needed gap in the market and judging by the global heat on the brand, we are in for a long and prosperous partnership,” Kemp says.
Lorrianne Cloete, head of marketing for 2XU South Africa, adds, “2XU has recently undergone a global rebrand, which has propelled it into an incredibly exciting chapter. With its roots firmly planted in tri, the brand’s fresh irreverence combined with its technical excellence has given it a very powerful identity and storytelling capacity enabling conversation directly with the thought leaders and trailblazers of the industry. Its message is unmistakably performance, but with a fresh challenging brand tone that talks directly to the ‘punks of sport.”
2XU will be available in selected Totalsports and Sportman’s Warehouse stores and online via www.2xu.co.za. Bizcommunity
Mandela’s tailor on mission to boost African fashion
Ivorian-Burkinabe tailor Pathe’O can look back on a 50-year career that has seen him rise from self-taught improviser to supplier of Africa’s wealthy and powerful, including anti-apartheid torchbearer Nelson Mandela.
As well as South Africa’s first black president, his richly coloured shirts have graced the backs of Moroccan King Mohamed VI, Rwanda’s President Paul Kagame and the continent’s richest man Aliko Dangote.
Now he’s doing his best to change attitudes to his profession across Africa and create opportunities for the next generation.
“In the minds of many people here, tailoring is a job for people who didn’t go to school, a job for failures,” Pathe Ouedraogo – his legal name – says with a smile.
“But African fashion, African fabrics interest the whole world! There’s a wealth of creators and talents,” he adds.
“We have to move up from cottage industry to mass manufacture, produce more to move Africa forward.”
‘My parents’ blessing’
A tall, slender man at 70 with the face of a wise elder, Pathe’O is never seen without one of his own vibrant shirts.
Now at the head of a pocket business empire that stretches across 10 countries and employs 60 people, the father-of-three still shows up every day at the workshops in Abidjan’s working-class district of Treichville, where he first set up shop 50 years ago.
Back then, rejected for work in the cocoa fields because of his frail health, he started teaching himself tailoring in a little workspace rented for just a few francs.
Bit by bit he improved, starting to make a wider name for himself by winning the local “Golden Scissors” contest in 1987.
Ten years later, Mandela would wear one of his shirts on an official visit to France, the images prompting new customers to beat a path to his door.
It was a heady rise for a man born during French colonial rule in the Upper Volta – later Burkina Faso – who set off aged 19 to make his fortune in Ivory Coast with nothing but “my parents’ blessing” in his pocket, according to his biography “De fil en aiguille” (“From thread to needle”).
“I never thought 50 years ago that I’d be here. It’s amazing!” the founder told reporters at a recent press conference in a luxury hotel as he unveiled the book.
A ‘simple man’
Now dozens of workers are packed into three large rooms scarcely ventilated by ceiling fans.
All the work is done by hand on old cast-iron Singer sewing machines, and Pathe’O moves among the tailors, designers and pressers to check their work and lend advice.
“You have to know how to do everything in this trade,” he says.
Leon Ouedraogo – no relation – has worked with Pathe’O for 40 years and now runs the shop floor.
He calls his boss “a simple man, always ready to talk, who takes time to listen and explain”.
The founder shows off the intricately patterned cloths dyed in another workshop in the same Abidjan district.
Each is known by a familiar name to insiders, from the “speckled” and “speckled print”, to “salad” and “clouds” – as well as the “Faso Danfani” patterns from Burkina.
‘Gave us pride’
“You’ve got to keep creating every day, surprise your customers, everyone wants something new,” says Pathe’O.
He finds inspiration on the street, from women who go to market decked in multicoloured clothes and scarves.
Ivorian designer Gilles Toure says that his mentor Pathe’O “gave us pride in wearing African fabrics”.
Pathe’O himself plans to put all his business success and international recognition behind what he calls his “battle” to win respect for Africa’s fashion industry.
He sees it as a key economic sector that could help the continent along its road to development.
With a huge, modern new headquarters building in the trendy Cocody district of Abidjan that will also host its charitable foundation, Maison Pathe’O hopes to “bring forth a new generation of African creators”. News24
Production, Consumption and Trade
Are All Expected to Make Gains in 2021/22
Date Posted: 1 June 2021
Highlights from the June 2021 Cotton This Month about the 2021/22 season include:
- Global production is expected to increase by 5.5%
- Global consumption is expected to increase by 2%
- Global trade is expected to increase by 2%
- Global ending stocks are expected to increase as stocks-to-use ratio declines
Production, Consumption and Trade Are All Expected to Make Gains in 2021/22
Decreases in Brazil, India and the USA have caused a reduction in the 2020/21 global production estimate but cotton production — along with consumption and trade — are all expected to increase in 2021/22:
- Production is expected to increase by 5% to 25.5 million tonnes with increases in planted area in the United States and West Africa.
- Consumption is expected to increase by 2% to 25.3 million tonnes as the global economy continues to recover.
- Trade is expected to increase by 2% to 10 million tonnes with import increases expected in all major consuming countries.
Global ending stocks are also expected to increase to 22 million tonnes as the stocks-to-use ratio declines to 0.87, although China’s stock is expected to decrease as the rest of the world’s expands slightly.
In terms of prices, The Secretariat’s current projection for the year-end 2019/20 average of the A Index has been revised to 81.9 cents per pound this month. The price projection for the year-end 2020/21 average of the A Index is 87.1 cents per pound this month.
About the International Cotton Advisory Committee (ICAC)
Formed in 1939, the ICAC is an association of cotton producing, consuming and trading countries. It acts as a catalyst for change by helping member countries maintain a healthy world cotton economy; provides transparency to the world cotton market by serving as a clearinghouse for technical information on cotton production; and serves as a forum for discussing cotton issues of international significance. The ICAC does not have a role in setting market prices or in intervening in market mechanisms. For more information, please visit www.icac.org.
Pepkor – changes to board committees
Shareholders and noteholders of the Company are referred to the SENS announcement published on 27 May 2021, informing the market of the appointments made to the board of directors of Pepkor (“Board”), effective 1 June 2021 (“Appointments”). The Appointments were made with the objectives of enhancing and widening the skill set of the Board as well as to strengthen the independence and diversity components of the Board.
Having expanded the skills base and diversity of the Board, the Board deems it appropriate that the benefits associated therewith be utilised on the Board committees. As such, and in accordance with paragraphs 3.59(c) and 6.39(c) of the JSE Limited (“JSE”) Listings and Debt Listings Requirements, respectively, the Board hereby wishes to advise the market of its decision to reconstitute the below Board committees with effect from 1 June 2021.
Audit and Risk Committee
Fagmeedah Petersen-Cook (interim chairman)
Human Resources and Remuneration Committee
Steve Müller (chairman)
Louis du Preez
Wendy Luhabe (chairman)
Louis Du Preez
Social and Ethics Committee
Fagmeedah Petersen-Cook (chairman)
Ian Kirk (chairman)*
Theodore de Klerk
* Appointed to the committee with effect from 1 June 2021.
# It is intended that Hester Hickey be appointed as chairman of the Audit and Risk Committee after an appropriate induction and hand-over process. Shareholders and noteholders will be duly advised when this change occurs.
As a consequence of the above Board committee appointments, Wendy Luhabe has resigned from the Audit and Risk, Human Resources and Remuneration, and Social and Ethics Committees with effect from 1 June 2021. As chairman of Pepkor, Wendy Luhabe has a standing invitation to Board committee meetings.
Pepkor – Competition Commission recommendation
Pepkor shareholders and noteholders are referred to the SENS announcement released by the Company on 4 August 2020 where it announced that it had entered into a sale and purchase agreement on 3 August 2020 with Cashbuild Ltd. (“Cashbuild”), for Cashbuild to acquire 100% of the issued share capital of The Building Company Proprietary Limited (the “Transaction”).
The Competition Commission announced their recommendation on Friday 28 May 2021 that the Transaction be prohibited as, in their view, the merger will result in a substantial prevention or lessening of competition in the market for building materials, hardware and related products in South Africa.
The recommendation made by the Competition Commission will be considered by the Competition Tribunal at a hearing where arguments from all parties will be considered in finalisation of its ruling.
Mr Price final results March 2021
Revenue from continuing operations for the 53 weeks ended 3 April 2021 went down 0.6% to 22.8 billion (2020: R23.0 billion) whilst profit from operating activities dropped 2.9% to R3.9 billion (2020: R4 billion). Profit attributable to shareholders decreased 2.1% to R2.6 billion (2020: R2.7 billion). In addition, headline earnings per share from continuing operation went up 1.4% to 1 070.3 cents per share (2020: 1 055.3 cents per share).
Final cash dividend declaration
Notice is hereby given that a final gross cash dividend of 462.70 cents per share was declared for the 53 weeks ended 3 April 2021. No final dividend was declared in the prior year.
The global economy is set for a recovery off the low base created by COVID-19. However, this is still only expected to reach pre-pandemic levels in 2023 across most nations. The group’s biggest market, South Africa, experienced fiscal distress due to COVID-19 which impacted domestic demand. However, this was softened by temporary relief measures provided by government (TERS and COVID-19 relief grant) and private sector credit providers. These relief measures have largely come to an end and the true state of the consumer environment is most likely to be revealed in the short to medium term. The group has benefitted from consumers receiving short term financial assistance but believes that the primary reason for its outperformance since the level 5 lockdown is due to its superior merchandise assortment and strong value offering to customers.
The group has proven that its business model is resilient in the worst possible circumstances and that its people are highly skilled and adaptable.
The group has a legacy created by its founders which established a culture within the organisation of partnership even in the most uncertain conditions. This philosophy allowed the group to compensate all its associates at full pay during the pandemic and it is a privilege to reward associates for their extreme dedication with incentives for outperformance.
Post year end trade (4 April to 15 May 2021) has been strong. Group retail sales increased 27.5% (excluding Power Fashion, up 16.7%), compared to the corresponding period in 2019 which grew 3.4% (2020 non comparable due to COVID19).
The group continues to trust in its fashion value business model to perform despite the prevailing uncertainty. FY2022 promises to be equally uncertain with many factors that will need to be overcome. The new group vision and strategy provides a clear call to action, bringing additional focus to its highly talented associates who are committed to delivering value to all stakeholders.
Pepkor interim results March 2021
Revenue for the interim period increased by 8.1% to R36.4 billion (2020: R33.7 billion), gross profit rose 5.2% to R12.9 billion (2020: R12.2 billion), operating profit climbed by 20.7% to R4.6 billion (2020: R3.8 billion) and profit attributable to owners of the parent shot up 65.5% to R2.4 billion (2020: R1.5 billion). Furthermore, headline earnings per share from continuing operations rose to 68.8 cents per share (2020: 45.6 cents per share).
Consistent with prior interim periods, no interim dividend is declared by the group. In response to the COVID-19 pandemic, the group suspended the dividend in the 2020 financial year with focus on liquidity preservation and allocation of resources. The dividend policy of three times earnings cover remains in effect.
Company outlook The group’s business model and market positioning have sustained performance since the onset of COVID-19 by responding effectively to changes in the operating environment and consumer behaviour, thereby entrenching its position in the discount and value sector. During this time Pepkor has made excellent progress in strengthening its balance sheet and liquidity, which will support its investment in growth opportunities.
Varying degrees of government-mandated lockdown protocols were put in place since April 2020 to mitigate the spread of COVID-19. It would therefore be more meaningful for trading subsequent to March 2021 to be considered against the group’s 2019 trading performance. Based on this comparison, the group is pleased to report positive trading momentum in all retail brands subsequent to March 2021. This includes a good start to the winter-season trade in the CFH brands and continued demand for furniture, appliances and consumer electronics.
Pepkor’s product mix and value positioning is ideally suited to the changing consumer behaviour, focusing on essential and everyday products. Pepkor’s footprint will continue to expand, especially in the most robust brands such as PEP and Ackermans with 200 new stores planned during this financial year.
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