28 of 2020

                                                              Newsletter No. 28 / 31 July 2020                             

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SA model Georgina Grenville secures the bag in Versace ad campaign

By Thobile Mazibuko

Georgina Grenville is starring in the new Versace PreFall 2020 ad campaign. Picture: Instagram/@georginagrenville

South African model, Georgina Grenville stars in the new Versace PreFall 2020 ad campaign.

The Durban-born supermodel, now based in London, Paris and New York, took to social media to share snippets of the new campaign.

For the campaign, Grenville leaves her luxurious home for the weekend, and before you know it, her daughters host a house party and turn it into something else.

Upon return, she notices that something massive happened while she was away but is quickly distracted by her two dogs dressed in her heavy jewellery.

The model has also worked with other big brands, walking for Off White, Torm Ford, and Salvatore Ferragamo, to name but a few.

Other South African models who have walked on the international stage include Siphosethu Ncise, a young male model from Khayelitsha, Cape Town. Ncise was scouted by Robin Fryer at an open day at 20 Model Management in Woodstock back in 2018.

Ncise went to Milan, where he walked for Jil Sander at Milan Fashion Week and got a photoshoot with Paolo Roversi. The editorial with Roversi made it to Vogue Hommes.

We also have Zozibini Tunzi, who made her international debut at New York Fashion Week, walking for Maxhosa. All that happened before she became Miss Universe.

She was featured in the ‘We Are Kings and Queens’, a range that Maxhosa dropped just after Tunzi was announced as Miss South Africa 2019. IOL

South Africa’s DTIC to focus on clothing masterplan

The department of trade, industry and competition (DTIC) of the South African government will focus on implementation of four masterplans, including one for the clothing and textiles industry, minister Ebrahim Patel said in his address to the National Assembly during the recent Budget Vote Session. The masterplans aim at increasing production and jobs.

From July 2019, the South African Revenue Services (SARS) has seized 550 shipping containers of “illegally-imported and undervalued clothing and footwear, to protect local industries and entrepreneurs,” Patel told Parliament.

“An agreement has been reached with the UK to maintain access for South African products in its market after Brexit and the country has also worked hard to build the African Continental Free Trade Area as the foundation for a long-term growth,” the minister said.

He stated that South Africa is well-positioned to become a major supplier of industrial goods and value-added services to the continent.

Mentioning that COVID-19 has exposed the fragility in the global economy, he said: “To prepare for the post-COVID world, we will strengthen efforts around reconstruction and recovery, including broader pacts with workers and businesses, focused on saving as many firms and jobs; identifying new opportunities; embracing digital technologies to recover and change; addressing economic inclusion with greater urgency”. F2F

Pepkor – Trading Update

The Pepkor group’s revenue for the nine months ended 30 June 2020 (“nine-month period”) decreased by 1.5% to R52.3 billion. This compares to revenue growth of 6.5% achieved for the six months ended 31 March 2020 and therefore highlights the negative impact of COVID-19 and the national lockdown during the third quarter where group revenue reduced by 17.2%.

It is estimated that the national lockdown period during April 2020 resulted in lost revenue of approximately R5.0 billion for the group. Very strong trade was achieved during May and June 2020 as lockdown measures eased and can be attributed to pent-up demand, social grant payments as well as the value propositions and market positioning of the group’s brands.

Continuing operations
Clothing and general merchandise
The clothing and general merchandise segment reported a decrease in revenue of 1.7% for the nine-month period, negatively impacted by a decrease in revenue of 15.9% during the third quarter.

Sales levels for Pep and Ackermans were very positive during May and June 2020 after stores reopened. Trading proved resilient due to their defensive discount and value market positioning as consumers prioritise apparel spending in areas such as babies’ and children’s clothing with focus on basic and replenishment products. The national lockdown regulations impacted the reopening of schools which resulted in weak back-to-school trading.

For the nine-month period the Pep and Ackermans brands in aggregate, reported a decrease in sales of 0.4% with a decrease in like-for-like sales of 3.5%. Retail space expanded by 3.1% year-on-year with 22 new store openings during the third quarter.

The performance of Pep Africa, which contributes less than 3% to group revenue, was impacted by lockdowns and adverse macroeconomic conditions across most countries of operation. For the nine-month period constant currency sales declined by 11.5%, while like-for-like sales decreased by 14.0%. Sales at actual rates decreased by 19.8%.

The Speciality business which focuses on discretionary products such as footwear and adult apparel, performed well during May and June 2020 with positive like-for-like sales growth of 6.3% and 11.2% respectively. For the nine-month period sales decreased by 7.4% with like-for-like sales reducing by 9.8%.

Furniture, appliances and electronics
The JD Group reported a decline in revenue of 6.0% for the nine-month period which includes a decrease of 21.8% during the third quarter. Sales for the nine-month period decreased by 7.6% with a decrease in like-for-like sales of 9.5%. The consumer electronics and appliances division (Incredible Connection and Hi-Fi Corp) resumed online trading during May 2020 on a limited product range in line with lockdown regulations. Lockdown regulations were lifted from June 2020 and trading in this division has been very strong, benefiting from the group’s investment in online retail capabilities and strong consumer demand which was fueled by technology upgrades, work/school-from-home and online purchase trends.

The furniture division’s retail brands were only allowed to resume trading from June 2020 but have also shown strong trading momentum since then. Credit granting criteria were tightened and the respective credit sales contributions in the furniture- and consumer electronics and appliances divisions reduced to 22% and 6% respectively compared to 28% and 7% contributions reported for the prior nine-month period.

Building materials
The Building Company reported a decline in sales of 17.2% for the nine-month period. During the third quarter sales reduced by 41.9% and like-for-like sales decreased by 41.6%. Lockdown regulations severely constrained trading during April and May 2020 where the business was only permitted to trade on a very limited product range. The business was permitted to trade on its full product range since June 2020 in line with the reopening of the construction industry and has since seen a positive trajectory in trading momentum.

Fintech
The Fintech segment reported revenue growth of 23.8% for the nine-month period. The FLASH business with its penetration into the informal market operated throughout the lockdown period and reported strong virtual turnover growth of 28.8% for the quarter.

Significantly curtailed credit granting characterised the quarter as the group reduced its exposure to unsecured lending through the Capfin business. Collections have been above expectation to date while a consolidation process is underway to reduce Capfin’s operating cost structure and support profitability going forward.

Liquidity update
Strong trading, pro-active expense management, conservative credit granting and positive credit book collections have benefited group liquidity and seasonal funding facilities secured as a contingency during the lockdown period were not utilised. The group settled its R521 million bridge term loan facility earlier than anticipated. As announced on 24 June 2020, Pepkor successfully completed an accelerated bookbuild which raised R1.9 billion. The book was oversubscribed by 5.3 times, indicating strong demand from more than 60 local and international investors. The group issued 172.5 million new Pepkor shares at R11.00 per share which reflected a discount of 6.2% to the 30-day volume weighted average price. The proceeds will be used to reduce debt in line with the group’s ambition to reduce its gearing levels. Processes to amend debt covenants and extend the group’s debt repayment profile are progressing well as the group continues to improve liquidity and reduce debt levels to enhance the flexibility of its capital structure.

Outlook
Strong trading momentum continued into July 2020. It is uncertain how long these levels of performance are possible as the impact of COVID-19 on the economy and employment unfolds. The group is expecting a constrained retail environment over the next 18 months. The group will continue to focus on its aggressive growth in market share as consumers are forced to reduce and reprioritise spending. It will capitalise on its defensive discount and value positioning as its retail brands continue to execute compelling customer value propositions and focus on providing affordable value to customers. Pepkor’s expansive retail footprint is also proving to be highly accessible to customers who are choosing to shop closer to home. Pepkor continues to make a positive difference in the lives of our customers and the communities in which we operate by providing convenient access to everyday products and services at affordable prices.

Pepkor – Steinhoff’s settlement claims

Shareholders and bond holders of the Company are referred to the SENS announcements issued this morning by Steinhoff International Holdings N.V. (“Steinhoff”) and Steinhoff Investment Holdings Ltd., which relate to the proposed settlement of litigation claims arising from legacy accounting issues (“the Steinhoff Announcements”).

As the proposed settlement referred to in the Steinhoff Announcements refer to the claimants receiving shares in Pepkor currently held indirectly by Steinhoff as part settlement of the claims, it is appropriate that these announcements be brought to the attention of shareholders and bond holders of the Company.

Further information is available on the Steinhoff website: www.steinhoffinternational.com

Woolies – trading update for the 52 weeks

Further to WHL’s operational update on 6 April 2020 and update on the Group’s strategic initiatives on 27 May 2020, both of which were published on the Johannesburg Stock Exchange News Service (‘SENS’), we wish to provide WHL stakeholders with a further trading update.

The extremely challenging trading conditions brought about by Covid-19 placed significant pressure on the performance of the Group. Group sales for the year ended 28 June 2020 (‘current year’) on a 52 week comparable basis were 0.1% lower compared to the pro forma year ended 23 June 2019 (‘prior year’), and declined by 1.1% in constant currency terms.

Second half (‘H2’) performance
The sales performance for H2 of FY20 was significantly impacted by Covid-19 following the temporary closure of the majority of the Group’s non-food stores, coupled with the decline in foot traffic and consequent loss of trade. Pursuant to the recent announcements on SENS which provided an update on the first seventeen weeks of trade in H2, the table below reflects sales growth for the last nine weeks of trade. The easing of restrictions from the beginning of May 2020 in South Africa and Australia saw Group turnover and concession sales growing by 4.7% in the last nine weeks (-0.9% in constant-currency terms) of the period, versus the 17.0% decline in the preceding eight weeks. To stimulate trade and manage inventory levels throughout this period, management executed a series of focused promotional and clearance initiatives targeted at generating and preserving cash. While this negatively impacted GP margin, it has resulted in better inventory levels and an improved working capital and net gearing position at year-end.

Southern Africa
Woolworths Food continued its positive momentum into the last nine weeks of H2, growing sales by 16.1%, as the easing of regulations allowed Woolworths Food to trade in categories that were previously restricted. This top-line result was achieved notwithstanding the constrained environment and the intermittent closure of specific stores for deep cleaning in instances of Covid-19 disruptions. Price movement of 6.5% for the current year reflects the impact of reduced footfall but bigger baskets and bulk packs. There was a significant focus on improving Woolworths’s online fulfilment capability, such as click and collect and increased delivery slots, to meet the increased demand through this channel, which saw online food sales growing by 87.8% in H2. Notwithstanding this, we recognise that this is not yet at optimal levels and are prioritising our efforts to improve this capability.

Woolworths Fashion Beauty Home (‘FBH’) re-opened stores from the beginning of May 2020, following the easing of restrictions that permitted the sale of essential items such as winter clothing, footwear, personal care and bedding, with all categories trading from mid-May 2020. This saw the pace of sales decline slowing to 12.4% in the last nine weeks of H2, versus the 61.4% decline in the preceding eight-week period. FBH online sales grew by 41.3% during H2.

Woolworths Financial Services (‘WFS’) was negatively impacted by the closure of stores, lower non-essential spend and lower prevailing interest rates, all of which placed pressure on book and revenue growth. The deterioration in customer collections and macroeconomic indicators resulted in higher impairments over the period. The WFS book reflected positive year-on-year growth of 2.0% (9.0% at 31 March 2020), while the impairment rate for the 12 months ended 28 June 2020 was 7.9% (12 months ended 30 June 2019: 3.7%; 9 months ended 31 March 2020: 4.2%).

Australasia
David Jones (‘DJ’) sales in the last nine weeks of H2 declined by 8.1% relative to the prior year, an improvement on the prior eight-week period, as restrictions began to ease in most parts of the region resulting in a gradual improvement in foot traffic. The decline in store sales was partly mitigated by the significant shift to online, which saw the channel growing by 100.7% in H2, and contributing 18.4% to sales. The Elizabeth Street store redevelopment has been completed with all floors trading from 4 April 2020. While the impact of lower foot traffic and the decline in tourism has been more pronounced in the CBD locations, the store is trading ahead of the remaining DJ store portfolio. Country Road Group (‘CRG’) began a phased re-opening of stores from 21 May 2020 following a 2-month closure, resulting in a moderate improvement in trade with sales in the last nine weeks declining by 20.9%. Sales in CBD and airport store locations continue to be significantly impacted. Online sales remain strong, growing by 28.1% in H2, and contributing 33.5% of total sales. The exit from Myer in August 2019 coupled with the closure of unprofitable stores at lease expiry resulted in a 5.3% reduction in CRG’s retail space.

Conclusion
The operating environment is challenging and fluid, and will remain so for the foreseeable future. Operations are being dynamically managed in terms of Covid-19 guidelines across Southern Africa and Australasia. The pandemic remains a part of our daily lives, and continues to disrupt our local and international supply chains, our store operations, and the availability of products and services to our customers. This is a challenge that the Group is continuing to monitor and manage carefully. The Group’s cash management, proactive engagement with lenders and other operational actions taken have ensured that the balance sheet remains robust, and the Board and management team remain resolutely focused on positioning the business to deliver sustainable long-term shareholder value. Progress against the key strategic projects outlined in the SENS announcement of 27 May 2020 is ongoing, and management looks forward to providing a further update in this regard as part of the Group’s financial results for the current year. Pursuant to our trading statement of 6 April 2020, a further trading statement will be issued in order to provide specific guidance once the Group is reasonably certain regarding the earnings per share (‘EPS’) and headline earnings per share (‘HEPS’) ranges for the current year.

Constant currency information
The constant currency information contained in this announcement has been presented to illustrate the impact of changes in the Group’s major foreign currency, the Australian dollar. In determining the constant currency turnover and concession sales growth rate, turnover and concession sales denominated in Australian dollars for the current year have been adjusted by application of the aggregated monthly average Australian dollar exchange rate for the prior year. The aggregated monthly average Australian dollar exchange rate is 10.43 for the current year and 10.15 for the prior year. The foreign currency fluctuations of WHL’s rest of Africa operations are not considered material, and have therefore not been applied in determining the constant currency turnover and concession sales growth rate.

Woolies – sale of Bourke Street Menswear store

Further to the announcement released on the Stock Exchange News Service on 27 May 2020, wherein the Company updated the market on the status of the sale of Bourke Street Menswear store, Woolies is pleased to announce that all conditions precedent to this transaction have now been fulfilled. The disposal price for the asset was AUD121 million, which is a favourable outcome. It is anticipated that the disposal proceeds will be received in early August 2020.

The net disposal proceeds will be applied towards the repayment of debt facilities. This is a key first step pursuant to the Group’s strategic review of the capital structure of the Australasian entities, which includes the reduction of its borrowings to ensure a more sustainable funding structure.

Shareholders are reminded that Woolies is currently in a closed period and will provide a further update on its key strategic projects as part of the Group´s financial results for the 52 weeks ended 28 June 2020.

TFG – board changes

Graham Davin, currently an independent non-executive director, has been appointed as the Lead Independent Non-Executive Director with effect from 1 August 2020.

Change in classification
Ronnie Stein, previously categorised as a non-executive director, is now classified as an independent non-executive director of the Company effective immediately. The Board of TFG, supported by the Nomination Committee, has assessed Mr Stein’s independence and is satisfied that he meets the requirements of independence, including those as set out in King IV.

Changes to committees
The following changes to the various board committees have been made with effect from 1 August 2020 and is a result of an ongoing review process, by the Nomination Committee, with regard to the composition of the Board and Board Committees as well as the need for succession planning and renewal and aims to align the Company with Corporate Governance requirements.

Audit Committee
• Sam Abrahams will step down as chairman and member of the Audit Committee
• Eddy Oblowitz will be appointed as chairman of the Audit Committee
• Fatima Abrahams will step down as a member of the Audit Committee
• Ronnie Stein will be appointed as a member of the Audit Committee

Risk Committee
• Eddy Oblowitz will step down as chairman of the Risk Committee and will remain a member
• Ronnie Stein will be appointed as chairman of the Risk Committee
• Fatima Abrahams will be appointed as a member of the Risk Committee

Nomination Committee

Mr Price – no change statement & notice of AGM

Shareholders are advised that the Company’s 2020 Integrated Annual Report (“2020 IAR”), which incorporates the audited annual financial statements for the 52 weeks ended 28 March 2020, has been distributed to shareholders and published on the Group’s website (www.mrpricegroup.com/mr-price-group-investor-relations.aspx), today, 28 July 2020.

The audited annual financial statements contain no modifications to the reviewed provisional Group results which were published on the Stock Exchange News Service (“SENS”) on Thursday, 25 June 2020.

There have been no changes to the review conclusion auditors report which was referenced in the reviewed results and made available to shareholders at the Company’s registered office on the same date as the release of the reviewed results on SENS.

Notice of annual general meeting
Notice is hereby given that the 87th Annual General Meeting (“AGM”) of shareholders of the Company will be held at Upper Level, North Concourse, 65 Masabalala Yengwa Avenue, Durban on Wednesday, 26 August 2020 at 14h30 to transact the business as stated in the notice of AGM forming part of the 2020 IAR. Considering COVID-19 and consequent travel restrictions, shareholders will be notified of any changes to the meeting arrangements.

In compliance with the provisions of the Companies Act 71 of 2008 and the Company’s memorandum of incorporation, shareholders may participate in (but not vote at) the meeting by way of electronic participation. To obtain electronic participation details, shareholders or their proxies must contact the Company’s transfer secretaries, Computershare Investor Services (Pty) Ltd. (“Computershare”) on proxy@computershare.co.za by no later than 14h30 on Monday, 24 August 2020. Shareholders will be liable for their own network charges in relation to electronic participation at the AGM.

Did you know……..

First Logo

The first clothing logo was a tiny embroidered crocodile, created in 1933. You can still see the crocodile in use today—it’s still used on clothing manufactured by French sportswear designer, Lacoste.

To Advertise…..   Click here to see fact sheet with advertising rates. 

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