Newsletter No 29/28 July 2023
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TFG directors sell almost R7m in shares
By Katharine Child
Sportscene is one of the TFG brands. Picture supplied
Lower sales and profit expected, which could be behind share disposals
Directors at TFG, owner of the Foschini, @home, American Swiss, and Sportscene brands among others, have sold a collective R6.9m worth of ordinary shares this month.
Typically, director dealings give insider insight into a company’s fortunes. When directors are buying their shares, it may mean the firm is doing better than expected and shares are undervalued.
Conversely, large sales sometimes indicate insiders believe the share price could drop, when company results are released to the market. Savvy investors often sell when directors do.
Directors sell for other reasons, such as high taxes that become due when shares vest as part of a remuneration package, or personal circumstances. None of the TFG share sales specified tax as a reason for selling.
At TFG:
On July 11, the group’s human resources director, Senta Morley, sold R2.3m in shares with the lowest share sold at R95.57.
On July 13, CFO Bongi Ntuli sold R1.8m in shares with the lowest share at R98.20.
On July 18 and 19, group director of financial services Jane Fisher sold almost R2.9m in shares, with the lowest priced at R93.
All Weather Capital’s Chris Reddy said, “generally, it is not a good sign when directors are selling”.
TFG could be facing challenges and a weaker share price as SA consumers are spending less on fashion.
Clothing chains are selling fewer items than the year before according to Truworths’ recent 52-week update, Mr Price’s first quarter update last week, Ackermans half-year results, and TFG’s annual results — both released in June. In short, consumers are cutting back on non-discretionary spend.
The high cost of living, high interest rates, food, electricity and municipal rates mean consumers’ wallets are squeezed.
There is also growing competition in the clothing space as Pick n Pay clothing increases the number of its stores and Edgars is doing better under private owner Retailability with Shoprite dipping its toes into clothing through its Uniq brand.
Retailers have been tight-lipped about Shein, the Chinese fashion behemoth that is believed to more valuable than global fast fashion seller Inditex. Shein produces all its clothes in China, adding 2,000 styles to the website daily and exporting globally at low prices.
Anecdotal evidence suggests more SA middle-class consumers are buying from the inexpensive Chinese exporter. Industry body the National Clothing Retailers’ Association laid a complaint about Shein at the department of trade, industry & competition in March, suggesting its members, which include TFG, Woolworths and Mr Price, are concerned that it is paying less tax than they do when importing apparel.
TFG has R7.1bn in debt, only a 1.2 net debt-to-ebitda ratio, one of the credit ratios banks use to ensure that borrowers earn enough to repay debt. However, its debt has risen.
It had a 0.2 debt-to-ebitda ratio in the 2022 financial year before it borrowed R2.1bn for its purchase of Tapestry, the owner of the Coricraft, Volpes, and Dial-a-Bed brands.
TFG has grown sales in recent years by buying new stores and adding revenue streams. Purchases included Jet at a low price and its purchase of Granny Goose bedding and manufacturing facilities, Tapestry and sneaker retailer Street Fever.
The retailer said at its year-end results it is not looking for more acquisitions, meaning it is unlikely to grow profit this way. With declining clothing sales across SA, it may see a fall in profit,
It also said in June that it is unlikely to beat its record 2023 financial year performances in its UK and Australia brands that sold plenty when these countries reopened after Covid-19. Its sales are expected to slow off a high base.
TFG has made a success of businesses overseas, but the UK is facing headwinds in its economy and a cost-of-living crisis limiting consumers’ ability to shop.
In all likelihood, as sales in SA and abroad slow, competition increases and acquisitions stop, TFG will report lower sales and lower profit. Perhaps, this is why directors are selling their shares.
TFG’s share price closed 3.15% firmer at R101.87. It is little changed in the year to date but has gained 8% so far this month.
Fashion scores: Pirates unveil designer kits
By Sandiso Ngubane
The 2023/24 season Thebe Magugu-designed home kit for football club Orlando Pirates. Image: Supplied
Sports and fashion converge as top African designer Thebe Magugu infuses sustainability and style into football gear
The 2023/24 season Thebe Magugu-designed home and away kits for football club Orlando Pirates were unveiled recently, and I couldn’t help but notice the stark differences between how fashion and sports fans received the news.
On the fashion side, stylists, influencers and the like reacted with much jubilation, while sports fans appeared to largely scoff at the jerseys, billed by both the designer and Orlando Pirates FC as “innovative”.
“Does this Thebe Magugu fashion house have any background in sports?” one tweet inquired, while another suggested Orlando Pirates “rethink this release”. Some went on to suggest that Magugu — one of the most celebrated African designers on the global stage — is butchering the legendary Soweto side’s image.
The jerseys are crafted from “100% recycled materials”, according to a press release, and “merge sustainability with cutting-edge innovation, including moisture-wicking AEROREADY and Climalite’s apparel technology. Designed to keep athletes cool and dry, the features effectively manage perspiration distribution and enhance airflow.”
As per Orlando Pirates FC’s own acknowledgement: “In step with the zeitgeist, the collaboration marks the latest marriage of performance sportswear and streetwear.”
It wasn’t the first time the club had collaborated with a local fashion designer. Just last month, they released a “Love Unites” jersey alongside Rich Mnisi another offering that received mixed reviews and a dash of homophobia as fans of the club questioned why Pride Month celebrations were relevant to their favourite team. If global trends are anything to go by, however, South African sports fans will need to become comfortable with fashion encroaching on their territory.
A worldwide trend
For years now, the lines between sports and fashion have been blurring with sportswear dominating fashion trends, sneaker culture going full mainstream, and the Covid-19 pandemic further bridging the gap as designers and brands sought to respond to the demand for more comfortable everyday wear.
It was no longer just celebrities like Beyoncé and Kanye West releasing lines with the like of Adidas and Adidas; luxury brands like Gucci have also collaborated with these traditionally activewear labels, including on the runway — as perhaps most epitomised by 2022’s Adidas x Gucci line — giving rise to ‘sports luxe’ as also seen with Grace Wales Bonner’s acclaimed take on traditional sportswear in collaboration with the three-stripes brand.
Big team-ups
At the Beijing 2022 Winter Olympics, we saw major fashion brands creating hi-tech uniforms for athletes and capsule collections for fans. Team USA was outfitted in Ralph Lauren, while Kim Kardashian’s Skims brand sponsored the team’s lounge and sleepwear. Team Canada inked a multiyear partnership with Lululemon, Ben Sherman created the uniform for Team Britain and Uniqlo dressed Team Sweden. Back in Tokyo in 2020, Telfar made a unisex uniform for Liberia.
As recently as Monday, perhaps the biggest move in the marriage between sports and fashion came in the form of an announcement that LVMH, the French luxury conglomerate, has inked a blockbuster deal, becoming a premium partner for next year’s Paris Olympic and Paralympic Games.
“Paris 2024 will entrust several essential roles to artisans from the LVMH Group,” the home of Louis Vuitton, Christian Dior, Kenzo and Chaumet, the jeweller set to design the Olympic medals, said in a statement issued July 24.
They further said that as part of the partnership, LVMH will extend its commitments to society through sports, supporting programmes that facilitate access to sports for children and young people aged 4-25, who live in vulnerable situations.
In another development, the US’s Major League Soccer tapped streetwear designer Guillermo Andrade to be its creative adviser, “hoping his cultural cache will make the sport more popular in the US”, according to Business of Fashion (BOF).
Beyond the track and field
Of course, many athletes today, including F1 driver Lewis Hamilton, can comfortably be named among the world’s most recognisable fashion icons and I bet we need not discuss Michael Jordan’s impact on streetwear. Outside these examples, sports organisations like the NBA have collaborated with Louis Vuitton, Canada Goose and Kid Super over the years, and in a bid to grow merchandising revenues, fashion tie-ups seem to be the most logical avenue for the likes of Britain’s Basketball League. Now, our very own Orlando Pirates seems to be going the same route.
These kinds of collaborations are a no-brainer as both sports and fashion stand to benefit from the engagement with new audiences. Who would have thought fashion influencers would be talking about Orlando Pirates and Thebe Magugu’s name would be on the club’s fan’s lips? It’s a win-win, and one that will hopefully inspire spirited aesthetic competition beyond the field.
Puma opens Netball World Cup United Warriors pop up store
Image supplied. Puma has opened a United Warriors pop up store for the duration of the Netball World Cup being hosted in Cape Town
Puma has opened a United Warriors pop up store for the duration of the Netball World Cup being hosted in Cape Town.
The global sports company, the official kit supplier for Netball South Africa, unveiled the United Warriors kit to be worn by the Spar Proteas in March.
Located on the corner of Loop and Waterkant street (32 Loop Street), fans can buy the official replica and fanwear as well as the latest in netball performance footwear, apparel, and accessories for women, men and kids at the United Warriors pop up store.
Performance footwear available at the store includes the Puma Solarstrike II worn by Bongi Msomi, Khanyisa Chawane and Refiloe Nketsa as well as the Puma Accelerate Pro worn by Elmeré van der Berg.
“With Cape Town hosting the tournament, Puma has joined the party by providing the netball-loving public with the opportunity to shop for official replica and fanwear, and performance gear including footwear as worn by the five Puma athletes in the Spar Proteas squad,” says Brett Bellinger, marketing director Puma SA.
“Fans can secure a 20% discount off all replica and fanwear at the United Warriors pop up store. The store’s location also makes it the perfect place to meet up with other fans before the games … and get your Netball SA gear,” he adds.
Netball SA president Cecilia Molokwane, at the opening of the United Warriors pop up store, says, “Netball SA congratulates Puma on opening a dedicated netball store during this period to serve the needs of our fans while making netball fashionable. We welcome the role that the brand and our other partners are playing in ensuring that netball takes its rightful place at the top table of South African sport.”
The replica home and away shirts retail for R499.
The Puma United Warriors store will transform back into the Puma Select Store at the completion of the World Cup. Bizcommunity
Mr Price – trading update
During the first quarter from 2 April 2023 to 1 July 2023 (the Period) of the financial year ending 30 March 2024 (FY2024), the group recorded growth in retail sales and other income (RSOI) of 21.4% to R8.4bn. This performance includes the recently acquired (effective 4 October 2022) Studio 88 Group (S88), excluding which RSOI grew 1.2% to R7.0bn.
As experienced by the retail market in general the group’s new financial year got off to a slow start. April commenced with power back-up in 60% of stores in the group’s core business, and recorded sales growth of 12.8% (excluding S88: -5.0%). Trading performance improved as back-up power solutions were extended to all stores by 30 June 2023, with retail sales for May and June combined increasing by 33.0% (excluding S88: 5.6%).
An improved performance in H2 is expected (compared to H1 FY2024 and the corresponding H2 period).
Truworths – business update
Group retail sales for the 52-week period ended 2 July 2023 (the ‘current period’) increased by 11.4% to R20.6 billion relative to the R18.5 billion reported for the 53-week prior period ended 3 July 2022 (the ‘prior period’ or ‘2022’). Due to the inclusion of a 53rd week in the prior period, the sales performance of the current and prior period is not comparable. Compared to the corresponding 52 weeks of the 2022 financial period (the ‘corresponding prior period‡’), Group retail sales for the current period increased by 13.2%.
Results release
The Group’s audited results for the 52-week period ended 2 July 2023 are scheduled for release on or about Thursday, 31 August 2023
Pick n Pay – trading statement and trading update
Group sales for the first four and a half months of FY24, covering the 20-week period from 27 February 2023 to 16 July 2023, increased 4.8%. South Africa sales growth for this period was 4.4% (0.9% like-for-like), while the Group’s Rest of Africa segment sales increased 15.9% (12.0% on a constant currency basis).
Clothing sales in stand-alone stores grew 10.9%. Group liquor sales for the period grew 9.8%. Online sales growth for the period was 75.3%, sustaining the strong online sales growth momentum reported for FY23.
Management does not yet have the required degree of certainty to provide details of the anticipated range for EPS, HEPS and pro forma HEPS for H1 FY24. Management will provide a further update to this trading statement once the Group has the required degree of certainty to do so
10-25% of Western women don’t wear a bra, and 75-85% of women who do wear an incorrect size
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