Newsletter No 23/15 June 2023
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Patel off to US to save SA from Agoa agony
By Tando Maeko
Trade, industry and competition minister Ebrahim Patel will lead a high-level delegation on a trip to the US amid fear of SA being kicked out of the Agoa trade pact. Picture: Freddy Reddy Mavunda/Business Day
Visit is part of SA’s plan to remain eligible for preferential access to US markets
SA is expected to send a high-level delegation headed by trade, industry & competition minister Ebrahim Patel to the US in July as part of the country’s plan to remain eligible for preferential access to US markets.
Patel is expected make an oral submission to the office of US trade representative Katherine Tai to ensure SA remains one of 35 Sub-Saharan countries eligible for trade benefits under the African Growth and Opportunity Act (Agoa) for 2023.
The submissions are to come ahead of the 10-year review of SA’s eligibility for the trade pact, which expires in 2024.
“This is standard practice, and talks such as these are usually conducted at ministerial level,” a government official close to the talks told Business Day.
The trip to the US comes amid fears of SA being kicked out of the programme that gives African countries duty-free access to US markets for certain goods such as textiles.
This follows a bipartisan group of US legislators writing to the country’s secretary of state, Anthony Blinken, national security adviser Jacob Sullivan and Tai last week asking for the upcoming Agoa Forum to be hosted in another country. The forum is intended to map the way forward for trade relations between the US and SA.
US-SA trade relations came under pressure after Washington accused SA of providing weapons to Russia in its war on Ukraine, a charge Pretoria has denied. President Cyril Ramaphosa has launched an inquiry into the docking of a Russian ship said to be involved led by retired judge Phineas Mojapelo.
“These actions by SA call into question its eligibility for trade benefits under Agoa due to the statutory requirement that beneficiary countries do not engage in activities that undermine US national security or foreign policy interests,” the US legislators wrote in their letter.
“While we understand that the Agoa eligibility review process for 2024 is under way and that decisions have not yet been made, we question whether a country in danger of losing Agoa benefits should have the privilege of hosting the 2023 Agoa Forum.”
The request by the US legislators is an early indication of the US’s political willingness to penalise SA for its perceived alliance with Russia despite the Ramaphosa administration denying it and saying that the country remains nonaligned in what it says is a conflict between Moscow and Kyiv.
One of the conditions of trade with the US is that its trade partners should not engage in activities that harm Washington’s national security interests or provide support for acts of international terrorism. Another is that these countries should co-operate in international efforts to eliminate human rights violations and terrorist activities.
In a separate process, Ramaphosa plans to send a high-powered delegation of ministerial envoys to meet Group of Seven (G7) countries to explain SA’s nonaligned stance on the Russia’s invasion of Ukraine. The envoys will include international relations & co-operation minister Naledi Pandor, Patel, finance minister Enoch Godongwana and minister in the presidency Khumbudzo Ntshavheni.
Any negative shift in trade relations between the US and SA would have a devastating effect on the local economy as the country battles an electricity crisis, which is hampering its growth prospects.
SA qualifies for preferential trade benefits under Agoa, which permits SA to export more than 7,000 goods to the US duty-free. The US is SA’s third-largest trading partner with more than 600 US companies operating in SA.
Foreign direct investment in SA from the US was valued at R116bn in 2019, a 6.8% increase from 2018. US direct investment in SA is led by manufacturing, finance, insurance and wholesale trade. SA’s foreign direct investment in the US was valued at R59bn, up 1.2% from 2018.
On Tuesday, department of international relations & co-operation spokesperson Clayson Monyela was adamant that the Agoa Forum will still be hosted in SA despite the push by US legislators to move the conference to another country.
“There is no decision by the state department/White House to move the Agoa Forum from SA,” Monyela said.
“President Cyril Ramaphosa’s special envoys recently visited the US … to explain SA’s active nonaligned position on the Russia-Ukraine conflict to key stakeholders and decision-makers. Our diplomats in Washington continue to engage on these matters.”
The Agoa Forum is likely to be held after the Brics (Brazil, Russia, India, China, SA) summit, at which the presence of Russia’s President Vladimir Putin is uncertain after the International Criminal Court (ICC) issued a warrant of arrest for him.
Should Putin arrive in SA for the summit in August, Ramaphosa’s administration would be compelled to arrest him, which the government has said would be tantamount to declaring war on Moscow.
Western Cape premier Alan Winde is leading a delegation from the provincial government and Wesgro, the entity responsible for the promotion of business in the province, to the US in a bid to retain SA’s Agoa eligibility.
Winde said the Western Cape’s economic losses would be higher than the rest of the country should SA lose its Agoa eligibility, and the province’s lucrative agriculture sector would suffer.
“There are concerns related to security matters, but it is also in the interests of the US to keep growing the potential future benefits the statute aims to foster and create,” he said. BD
Are skinny jeans in or out?
By Sandiso Ngubane
Levi Jeans. Image: Mnz/Unsplash
Here’s why you shouldn’t be bothered about it
Wherever you look, it’s almost impossible to ignore that denim is back in a very big way. Not that it ever disappeared — nor will it ever go away — but it’s been a minute since high street brands have really pushed denim to interesting places. From Mugler’s mesh-panel high rise skinnies to Balenciaga and Altuzarra’s SS ’23 takes on the maxi skirt, we have slowly witnessed a post-pandemic outlook in fashion that is moving us away from the comfortable fits we’ve preferred for quite a while now.
But while brands — and department stores alike — make a new push for denim, this happens at a time when there’s a lot of debate about whether or not skinny jeans are dead, as some have so boldly declared.
I’ve personally been a fan of skinnies for the better part of the last decade and I must admit, it was the pandemic that weaned me off what had defined my personal style my entire adult life. The truth is, skinny jeans are not all that comfortable, doesn’t matter what your favourite brand or editor might tell you. For me personally, they simply looked fantastic on my skinny frame. Now, however, I have fallen in love with the comfort I get from looser fits and, quite honestly, anything that isn’t denim.
I might be in the minority, if the words of Levi’s Strauss CEO Chip Berg are anything to go by. “The skinny jean is not going away any time soon,” he said earlier in 2023 at the brand’s fourth-quarter earnings call, adding that the style had been a top seller for the brand in 2022, even though half of its revenue in the bottoms category had admittedly come from baggier fits for the last quarter, according to Reuters.com.
Berg’s declaration follows many a fashion magazine’s insistence that skinnies are done, largely because Gen Z fashion commentators on TikTok had asserted it to be so. Honestly, the pandemic environment was ripe for the style’s demise and the narrative really took off. But numbers don’t lie, and over the last few months, depending on what or who you read, you’d be justified in your confusion about whether or not the style is still acceptable.
“TikTok says skinny jeans are cancelled. We agree,” read a GQ Magazine headline back in 2021.
“The skinny jean is officially dead,” wrote one Tiffany Ap for Quartz, reporting early in 2022 that the straight leg jean had toppled it as the most popular fit. But what Levi’s earnings call might confirm is that the figure-hugging style’s obituary had been prematurely written. While some media outlets are still singing from the “skinny jeans are dead” hymn book, over on TikTok, where the chorus began, self-proclaimed trend watchers are saying: “Skinny jeans are back.”
“Recently, fashion-forward celebrities and royals alike have all been sporting the polarising silhouette, leading TikTok creators to dub the style an incoming trend,” reports Bustle.
This is symptomatic of an era where much that many call trends is nothing beyond flash-in-a-pan fads no different to, say, a trending sound on TikTok, that may garner you 30,000 likes based on nothing but the fact that you simply shot a video with that particular sound. So much value is placed on fleeting obsessions, rather than what’s actually happening around us to influence our purchases beyond what a content creator says, giving no context to their claims in a way a professional consumer insights analyst would be required to.
It confirms a disconnect between what’s happening in real life and what’s merely digital noise. It reveals a persistent devaluation of expertise that should force us to look twice at what we see or hear in favour of transient virality. There are so many voices all speaking at the same time, few stop to think about why those voices are worth listening to, beyond the fact that they’ve just cashed in their proverbial 15 minutes of social media notoriety.
So, while I don’t have an answer to the question of whether or not you should still be wearing your skinny jeans, I do think there’s something positive to get out of this. Nothing trumps developing a personal style that doesn’t require looking at what’s happening outside, let alone on TikTok. 
Time to say Goodbye
Dear Carla,
I have always enjoyed your magazine which has many interesting topics and information over the years.
Having reached the age of 71years, the time has come for me to hang up my work clothes and hand over to younger blood.
In my 30 odd years in the thread industry, I am always astounded at some customers who buy the best quality leather, fabric, canvas etc., buy expensive high speed machinery and then look for the cheapest thread to hold the product together.
This usually results in having to slow down their machines in order to prevent thread breakage, increased repairs and RTM’s from their customers. This can be compared to filling your Ferrari with regular fuel instead of premium, neglect servicing or maintenance, in order to save money. The car will perform, but not to its optimum specification, nor will it last.
Few factories conduct a time and motion study to establish where the real costs are. Although free “threaducation” is offered, only some take up the offer where advise in using correct needles and thread is given for every sewing solution.
To those customers who have supported me and to ACA Threads who I have had the privilege to have represented for the last 18 years, I express my heartfelt thanks to all.
Confucius said “Choose a job you love and you will never have to work a day in your life”. Who knew I would have so much in common with an ancient Chinese philosopher?
Bless you all and I wish you all good health and increased prosperity in the years ahead.
Kind regards
Terry Holton
Regional Sales Agent
Foschini final results March 2023
Revenue for the year grew to R55.1 billion (R46.2 billion) whilst gross profit was higher at R24.8 billion (R21.0 billion). Operating profit before finance costs rose to R5.4 billion (R4.8 billion). Profit for the year attributable to equity holders increased to R3 billion (R2.9 billion). Furthermore, headline earnings per share lowered to 968.9 cents per share (1 009.0 cents per share).
Results presentation webcast
A live webcast of the result presentation will be broadcast at 10:00 am (SAS) on 09 June 2023. A registration link for the webcast will be available on the Company’s website at www.tfglimited.co.za. The slides for the annual results presentation will be made available on the Company’s website prior to the commencement of the webcast. A delayed version of the webcast will be available later the same day.
Dividend
Notice is hereby given that the directors have declared a final gross cash dividend of 150.0 cents (120.00000 cents net of dividend withholding tax) per ordinary share for the six-month period ended 31 March 2023. This equates to a dividend cover of 3x, which the Supervisory Board believes is appropriate, given both the high level of uncertainty in the global consumer environment as well as the significant level of investment in the business. The dividend has been declared from income reserves.
Company outlook
The year ahead is expected to remain challenging especially for the South African business where load shedding and increased consumer pressures are expected to deteriorate.
In light of the current load shedding and global uncertainties and despite the Group’s high level of conviction around a number of clearly defined and identified growth levers and organic investment opportunities, the Group is adopting an appropriate prudent approach to its treatment of FY2024 as a year of consolidation with focus on improving operating leverage.
Operationally, considering the current macro-economic conditions and the likelihood of continued high levels of load shedding, there will be a continued focus on controlling inventory purchases so as to defend gross profit margins and reduce the absorption of working capital, with FY2024 inventory purchases expected to be below those of FY2023 on a like-for– like-basis. Maintaining operationally effective expense control remains a key lever as evidenced during the second half of FY2023, support and administration expenses of approximately R220 million were frozen. Similar cost savings initiatives are planned for the year ahead. Planned capital allocation for the year ahead has been revisited, and planned new store openings have been curtailed, resulting in our store capital expenditure likely to approximate half of what was incurred in FY2023. TFG’s future brand and store roll-out pipeline remains as robust as ever, however, current market conditions require a slower execution timeline of this roll- out.
Trade since the year-end has been muted across all three of our trading territories. For the 2 month trading period to May 2023 (compared to the same period ending May 2022), TFG Africa had retail turnover growth of 15.4% (5.8% excluding Tapestry*), TFG London retail turnover declined 10.8% (GBP) whilst TFG Australia declined 4.9% (AUD). Both TFG London and TFG Australia are up against a very high base in the comparative period which was driven by a post Covid-19 heightened demand for occasion wear and back to work shopping as mentioned in the previous paragraphs.
Truworths – appointment of board committee member
With effect from 3 July 2023:
• Ms Dawn Earp has been appointed as a member of the Company’s Risk Committee.
Rex True – appointment of company secretary
Shareholders were referred to the SENS announcement released by Rex Trueform on 13 March 2023, in terms of which shareholders were advised of the resignation of the Ms Ardilah Mohamed-Mushabe as the company secretary of Rex Trueform with effect from 31 May 2023. Shareholders were further advised that the process of identifying Ardilah’s successor had commenced and that they would be advised of the appointment in due course.
The company announced that Ms Anita Gihwala (BComm, LLB, MBA) has been appointed as Rex Trueform’s new company secretary with effect from 7 August 2023. Anita, who is an admitted attorney, has extensive experience in the banking, financial services, regulatory and private equity industries.
Woolies – change to the company’s credit rating
Senior Unsecured Floating Rate Noteholders are advised that S&P Global Ratings (“S&P”) revised the credit rating of WHL upwards, with effect from 08 June 2023, from ‘ZaAA’ to ‘ZaAAA’ on a long term national scale basis
Gynasceum, sive Theatrum Mulierum, known as the first fashion magazine ever, was produced by Josse Amman in 1586. He was a Swiss painter who published plates on “the fashions of the day with the title Gynasceum, sive Theatrum Mulierum.” Gynasceum, sive Theatrum Mulierum meant Theatre of Women; which, according to www.magforum.com, were reproduced by engraving the female costumes of all of the nations of Europe.
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