Newsletter No 24/28 June 2024

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Woolworths invests R2m to help young entrepreneurs level up their brands

Meet the 15 talented winners of the Woolies’ Youth Makers competition, who’ll be showcasing their wares in select stores this winter

The Woolworths’ Youth Makers competition winners include 15 young entrepreneurs whose brands produced everything from food to fashion.
Image: Woolworths

In celebration of Youth Month, Woolworths has revealed the winners of its Youth Makers competition, designed to help young entrepreneurs take their businesses to the next level. 

Hundreds of hopeful young small business owners entered the competition last year. Finalists were flown to Joburg to pitch their businesses. Fifteen winners were selected for the exclusive opportunity to learn from some of the best in the field.

Each winner receives one-year mentorship from Woolies experts to support them in building sound foundations for the retail world, exclusive insider information on how retail works in SA, the opportunity to market to Woolworths customers, and a R130,000 grant to grow their brands.

Meet the 2024 Youth Makers competition winners:

The winners of the Woolworths Youth Makers Competition.
Image: Woolworths

Helen-Jean Stubbs and Sim Cele of Enzo’s Mighty Bites create nutritious snacks for busy little ones.

Award-winning Khaya Burwana of Agrikey Farming, a mixed farm specialising in poultry and vegetables, has made a name for himself in the country’s agricultural sector. 

Xolile Mabuza’s Tendalo Trading is home to ethically sourced bags made from recycled and upcycled rubber tubes.

Hlubi Hewu opened her store Planned Gifts to curate special gifts for every occasion.

Michael Ludwig Hittinger celebrates gender expression and inclusivity through cutting-edge fashion brand, Michael Ludwig Studios. 

The winners of the Woolworths Youth Makers Competition.
Image: Woolworths

Crochet genius Tenele Zwane offers made-to-order garments, each of which takes hours of dedication and craftsmanship to produce, through her brand Subtle-T Designs.

Tshegofatso Ramothibe and Oageng Manana are the proud founders of Meetlo by CityBirds, home to incredible furniture designed with a modern, African twist. 

Kabelo Moraloki’s namesake brand, Kabelo Moraloki Arts, offers mugs, T-shirts and tote bags adorned with his original artworks. 

Unathi Mgolombane of doba.upcycle creates colourful statement jewellery that starts conversations around recycling while brightening up every outfit.

Balini Naidoo Engelbrecht, founder of Balini Braille Clothing, designs beautiful clothing to help visually impaired people choose fashion they like. 

The winners of the Woolworths Youth Makers Competition.
Image: Woolworths

Isabel Bothma established Isa B Jewellery Designs, home to unique, bold and beautiful jewellery pieces. 

Makomborero Mutezo spent years researching and sourcing the best ingredients to make his brownies, and his business, The Hungry Mute, a success. 

Nompumelelo Nhlapo is the force behind Gadat House, an innovative and inspiring fashion house rooted in sustainability and intentionality. 

Neo Dulaze and Katleho Mchalla, a brother and sister duo, created lifestyle brand Berry Homeware to harness their creativity by producing art, décor and home fragrances. 

Sibusiso Mokhachane’s SoulArt Foundation produces recycled and upcycled luggage, textiles and clothing with a vision to “use what you have, where you are”. 

Find the Youth Makers winners and their brands in stores

Woolies customers will have the opportunity to meet some of the Youth Makers winners in person, and shop their brands, at select stores around SA during June, July and August:

The Woolworths’ Youth Makers competition forms part of the company’s Inclusive Justice Initiative; a commitment to inspire inclusive growth by taking action against discrimination and marginalisation, and promoting inclusion and empowerment. 

Woolies aims to uplift small youth-owned businesses and improve the socioeconomic reality of our youth — a vital step towards building a more inclusive future for all.   

Pepkor pins hopes on fintech growth

 By Shawn Stockigt​

Pepkor has produced decent interim results considering the brutal retail environment, with future gains expected from its high-growth fintech division and good potential in Brazilian operations

Pep store Canal Walk. Picture: Supplied

Fashion retailing conglomerate Pepkor released its results for the six months ended March 2024 in May.

Highlights included gross margins improving by 2% to a healthy 38.1%, revenue increasing by 9.5% to R43.3bn and operating profit (on a normalised basis) growing 13% to about R5.1bn.

These metrics reflect a decent set of results, especially considering the challenging retail environment, with consumers unable to reach deep into their pockets due to high living costs and unemployment. 

On top of this, retail companies that import goods have had to deal with supply chain disruptions resulting from delays caused by inefficiencies at local port terminals.

In the past, Pepkor has focused mainly on cash sales. This has traditionally reduced the group’s risk profile relative to its peers, with a heavier credit sales focus during periods of increasing interest rates. These results were no different, with cash sales making up 87% of income generated. 

But what is highlighted is that the group grew credit sales by 34%, compared with cash sales growth of a meagre 3.8%. This growth seems to have resulted from a well-targeted strategy and strong investment in its retail credit book.

Increasing credit sales is not necessarily bad, but it does add an extra layer of risk which investors will need to keep a beady eye on in future. 

For now, the group is managing credit sales quite well, considering that nonperforming loans have not spiralled despite the challenging economic environment and the growth in the retail credit book.

Despite group debt being well under control and remaining flat compared with last year, a potential negative from the results is the slight increase in finance costs. This is predominantly due to higher interest rates and should ease on the back of a potential lowering of net debt, as well as the possibility that the interest cycle has peaked and interest rates could come down in the near future.

In February, the group announced the sale of The Building Co. This will strengthen the balance sheet, as the expected proceeds of R1.2bn will reduce debt and fund growth opportunities. The sale is still subject to approval by the Competition Commission.

With the exit of the building materials segment, the group now operates under two broad segments: traditional retail and fintech. The business has a broad footprint through its various brands, with about 5,900 stores across nine African countries and in Brazil.

Traditional retail is the group’s biggest segment (87% of group revenue and 90% of operating profit) and it trades across the clothing, general merchandise, furniture, appliances and electronics sectors through strong household brands such as Pep, Ackermans, JD Group, Russells, HiFi Corp, Incredible Connection and Avenida (its Brazil business).

Pepkor’s fintech division continues to perform well, achieving 24.5% in revenue growth over the past six months. Though still relatively small in the bigger group (13% of revenue and 10% of operating profits), this business segment is considered a high-growth area.

Its FoneYam business continues to see strong demand and has about 200,000 active cellular handset rentals. The group’s insurance business, Abacus — which used to be housed in the JD Group — now operates across Pepkor brands and has underwritten about 650,000 insurance policies. These two businesses, together with the other fintech businesses, generate good annuity income for the group long after customers leave the store.

It’s no surprise then that looking ahead, growth for the group can be expected to come from its fintech businesses and possibly Avenida in Brazil. Thanks to the success of its operations in Brazil and considering the group’s strength in emerging markets, it could expand into other South American markets.

Investing in retail stocks over the past five years has been very stock specific, with companies such as Shoprite and Clicks performing well, while Pepkor and Mr Price, for example, may have disappointed investors. 

On most valuations Pepkor does not appear overly expensive, but it may need local economic variables to pick up before any major rerating.  

Play big

By Nokubonga Thusi

Wang Yibo for the Lacoste “Play Big” campaign Image: Supplied

Art and fashion collide in Lacoste’s new campaign that celebrates the brand’s tennis heritage and creativity

Art and fashion collide in Lacoste’s new “Play Big” campaign, which sees the brand’s iconic crocodile reimagined as a larger-than-life work of art alongside six ambassadors — tennis champions Novak Djokovic and Venus Williams, actors Pierre Niney and Ahn Hyo-seop, singer and model Jeon Somi, and artist Wang Yibo. Contemporary artists Imruh Asha and Ibby Njoya, photographer Willy Vanderperre, and musician Antonio Sánchez have merged engineering, textile art, and craftsmanship to create an 8m-long Lacoste crocodile that sits 3m high. Celebrating the brand’s tennis heritage and creativity, the sculpture is crafted from traditional tennis fabrics such as mesh, cotton polo, and knitwear. lacoste.com   

Pick n Pay – annual report and AGM notice

The 2024 Integrated Annual Report and 2024 Corporate Governance Report are now available on our investor relations website at www.picknpayinvestor.co.za.

Notice of 2024 Annual General Meeting (AGM)
The Notice of the AGM is available on our website. The AGM will be held entirely by electronic communication at 08:30 on Tuesday, 27 August 2024

T-Shirts

The T-shirt is one of the most popular items of clothing in the world, and around two billion of them are sold every single year.

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