Newsletter No 29 /8 August 2025

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Can local retailers survive Shein and Temu eating into market

Lester Kiewit speaks to Michael Lawrence, Executive Director of The National Clothing Retail Federation, about the massive impact e-commerce giants Shein and Temu have had on South Africa. They have already cost 8000 workers their jobs and have managed to bag R7.3billion in sales in 2024.

Click here to listen ►    https://youtu.be/JcsCiLbrbQg     

Shein and Temu threaten local fashion jobs as e-commerce surges

By Nompilo Goba

Shein and Temu app icons are seen in this illustration. File photo: Dado Ruvic/Reuters

Report warns that more than 34,000 local jobs could be lost by the end of the decade

Growing consumer appetite for online shopping is fuelling a fresh crisis in the clothing industry, with a new report warning that more than 34,000 local jobs could be lost by the end of the decade as offshore e-commerce giants tighten their grip on the market.

According to a study commissioned by the Localisation Support Fund and conducted by research firm BMA, fast growing platforms including Shein and Temu are rapidly eating into the market share of local retailers and manufacturers, pulling billions in consumer spending away from domestic value chains.

In 2024 alone, the two offshore platforms raked in an estimated R7.3bn in SA sales, more than a third of all online clothing purchases. According to the report, e-commerce sales climbed from just 2.4% of the market in 2015 to nearly 10% last year.

The report said that more than 8,000 local jobs, the majority in retail and the rest in manufacturing, had effectively been lost because of the platforms’ rise. That number could quadruple by 2030 if growth continues unchecked.

The threat comes as SA is beginning to rebuild its clothing and textile sector. Since 2019, government and industry players have worked to implement the R-CTFL (Retail, Clothing, Textile, Footwear and Leather) Masterplan — a broad-based strategy to revive local manufacturing and boost employment through increased local sourcing.

But the arrival and dominance of ultra-fast fashion platforms have complicated that mission. While Shein and Temu offer low prices and seemingly endless variety, their success is powered by global supply chains that exclude SA manufacturers almost entirely.

“These job losses stand in stark contrast to the progress made under the R-CTFL Masterplan, a social compact adopted in 2019 to boost local sourcing and drive employment growth across the value chain. The challenge now is to safeguard those gains and ensure the next phase of e-commerce growth supports, rather than undermines, SA’s industrial ambitions.”

To assess the full effect, the report modelled three scenarios based on how quickly Shein and Temu grow. In the most aggressive scenario, SA could lose out on more than R6.2bn in local manufacturing sales, with as many as 18,300 factory jobs and 16,400 retail positions displaced by 2030.

“The surge in the market of cheap goods from these e-commerce offshore platforms is depressing the prices that local retailers can charge. This is smash-and-grab economics, an easy way to come into a country, grab what they can, and leave all the costs to us.

“The report shows that clearly and what’s really worrying is the broader impact this will have. Right now, we’re seeing the effect on the retail-clothing sector, but what about all the other sectors that are impacted, stationery, furniture and other consumables for example, leather, and other textiles? This is just the beginning, and it’s a precursor of what’s to come,” said SA Clothing and Textile Workers’ Union director of research Simon Eppel.

“These offshore operations are causing real distress to competition, to the economy and to jobs. If we cannot succeed in mitigating the risk, then we should have banning these apps as an option. We’ve seen countries like India implement a localisation mandate. That’s something we should be looking at very seriously, how to localise these operations, how to bring compliance and how to make sure they contribute to the local economy.”

SA is not alone in grappling with the fallout. India, Brazil, Indonesia and Turkey have moved to rein in offshore platforms through tighter import controls, local sourcing mandates and digital regulations. In some cases, governments have even banned platforms that failed to comply.

While SA has taken some steps, including the scrapping of low-value parcel exemptions in 2024, which now subjects imports under R500 to standard VAT and customs duty, the report said more action was needed to level the playing field.

Among the proposed measures were stricter compliance requirements, improved consumer protection protocols and stronger digital infrastructure to support local e-commerce. The report also calls for a broader localisation push within the online retail ecosystem, one that links local suppliers with growing digital demand.  

Sappi caught in crosshairs of trade wars

By Jacob Webster

Sappi CEO Steve Binnie. Picture: Sunday Times

Due to weaker results, the group says no dividend will be declared for the 2025 financial year

Paper and pulp producer Sappi has reported a loss for the second consecutive quarter as global trade wars weigh on its earnings.

The group reported a $33m loss in the third quarter ended June, after a $20m loss in the second quarter.

The company reported adjusted earnings before interest, tax, depreciation and amortisation (ebitda) of $390m for the first nine months, down 15% year on year. For the year to date the company’s profit is $17m.

As European manufacturers and Chinese clothing makers adopt a more cautious stance to their exports in the face of US President Donald Trump’s hostile tariff policies, Sappi has seen the demand for its biggest products take a hit in recent months.

First is dissolving wood pulp (DWP), used to make semi-synthetic materials lyocell and viscose to produce clothing and textiles. DWP is one of Sappi’s most popular products, contributing just under 20% of the group’s sales.

However, one of the biggest markets for Sappi’s DWP is China, where sentiment across the textile value chain has soured on US policy uncertainty and the country’s deflationary environment which, together with low paper pulp prices, encouraged local producers to increase DWP production this year.

Amid the heightened competition and subdued sentiment in Asian markets, China’s benchmark DWP price dropped by $100/ton in the third quarter alone, resulting in sales for Sappi’s pulp segment being down 4% year on year in the three months to end-June.

“The textile and apparel sector, which is a key driver of DWP demand, remains highly sensitive to ongoing trade tensions and inflationary pressures,” said the company.

Trade tensions have also weighed on the group’s packaging segment, where profitability was “significantly below” that of the previous year as manufacturers, particularly in Europe, pulled back production in response to uncertainty and subdued global growth.

“Demand across global packaging and speciality papers markets remained muted, weighed down by lingering economic challenges and cautious consumer behaviour,” Sappi said.

The group cited increased competitive pressures in Europe and extended downtime at its Ngodwana mill in the second quarter. Profitability in the paper and packaging segments is expected to improve in the final quarter of the year as Sappi’s Somerset Mill ramps up production.

“Escalating tariff-related trade tensions between the US and key global trading partners continue to contribute to significant uncertainty in the international economic landscape,” warned the company.

As trade wars put pressure on profitability, Sappi reported a net debt position of $1.95bn at end-June, up 45% from the previous first three quarters.

On the back of weaker results, the group announced that no dividend would be declared for the 2025 financial year.

“Within the context of our elevated net debt levels and ongoing macroeconomic uncertainty, Sappi remains firmly focused on preserving liquidity and strengthening cash flow.

“Reducing net debt is our immediate priority and we will continue to assess our capital allocation in line with our financial position and long-term strategic objectives,” it said.   

White Stuff acquisition boosts TFG’s first-quarter sales

by Jacqueline Mackenzie

Anthony Thunström. Picture: Supplied

Group says tariff uncertainty has hindered broader economic recovery and resulted in subdued GDP growth

The Foschini Group (TFG) has reported an 11.5% increase in sales for the first quarter to R14.4bn, supported by the acquisition of British fashion and lifestyle retailer White Stuff.

Group online sales for the 13 weeks to June 28 grew by 45.5%, contributing 14.5% to total retail sales, from 11.2% a year ago, the group said in a statement on Thursday. Africa online sales increased by 40.2%, driven by its Bash platform.

Bash was launched in 2023 to unify TFG’s previously fragmented online presence, consolidating more than 15 separate brand websites into a single, customer-centric platform.

The group said Retail Liaison Committee data showed its market share in SA had increased by 50 basis points during the period in the TFG Africa segment as it outperformed total market retail sales growth.

Sales in the TFG Africa segment rose 5.2% in the first quarter due to the Easter holidays falling in April and a robust sales performance compared with the year-earlier period. Pre-election consumer caution had weighed on the group’s 2024 first quarter.

While the weak UK economy weighed on TFG London, the addition of White Stuff to the portfolio resulted in sales increasing by 57.7%. Excluding White Stuff, sales were down 2.6% in pounds.

TFG acquired White Stuff for an undisclosed sum in October 2024. Established in 1985, White Stuff specialises in “unique, thoughtfully designed clothing and accessories for women, men and children”. The company has 113 stores and 46 concessions in the UK within John Lewis, Marks & Spencer and other independent retailers.

TFG CEO Anthony Thunström said at the time of the acquisition that it was a milestone for the group’s medium-term strategy to achieve critical mass in the UK.

TFG Australia’s sales were down 2.8% year on year in Australian dollars in difficult trading conditions with sustained high inflation and interest rates affecting consumers.

The group said global and domestic business conditions had been volatile due to tariff uncertainty, hindering broader economic recovery and resulting in subdued GDP growth.

“In TFG Africa we remain confident in our ability to sustain gross margin and control costs,” it said.  The first half is expected to be particularly challenging given the slow June trade, inconsistent trends and a promotional winter in SA.

The group expects to open more than 100 new stores in the 2026 financial year, while optimising its existing store portfolio.

For the three weeks to end July 19, TFG Africa’s sales had increased by 9.2%, it said.

“While the UK economy remains under pressure, we are encouraged by the continued strong performance of White Stuff. Sales growth was 68.8% [in pounds] for the three weeks ended July 19. Excluding White Stuff, sales growth is 6.3%,” TFG said.

In Australia, sales have contracted by 4.1% [in Australian dollars] in the three weeks ended July 19. Though trading conditions remained challenging, the economy appeared to be stabilising, with two 25 basis point interest rate reductions in recent months. 

Woolworths – trading statement and update

Trading update

Group
The Group’s results to be reported for the 52 weeks ended 29 June 2025 (the “period”) are not directly comparable to that of the 53 weeks ended 30 June 2024 (“prior period”), due to an additional week of trade in the prior period.

Group turnover and concession sales increased by 6.1% and by 6.8% on a constant currency basis for the period, and by 6.4% and 7.3% in the comparable second half of the period (“H2”) respectively, notwithstanding challenging macroeconomic conditions across both geographies, and significant levels of uncertainty arising from global trade relations.

Woolworths
In South Africa, consumer sentiment and discretionary spend remains subdued, despite moderating inflation and interest rate cuts. Notwithstanding this constrained macro backdrop, Woolworths South Africa delivered strong turnover and concession sales growth of 9.4% for the period, with H2 growth of 9.8%.

Within this, our leading Food business continued to deliver above-market turnover and concession sales growth of 11.0% and 7.7% on a comparable-store basis. Price movement for the period averaged 5.3%, with positive underlying volume growth driven by increased footfall and average basket size, supported by our ongoing innovation and enhanced customer experience. Excluding Absolute Pets, which was acquired in the fourth quarter of the prior period, Food sales increased by 9.2%. Sales growth in H2 was 10.6% (9.4% excluding Absolute Pets), with price movement of 4.2%. Trading space increased by 2.4% on the prior comparable period. Our on- demand Woolies Dash offering grew by 41.6%, with overall online sales increasing by 32.9% and contributing 6.6% to total Food sales.

Fashion, Beauty and Home (“FBH”) turnover and concession sales increased by 4.7% and by 5.1% on a comparable-store basis. Trading momentum improved throughout the period, delivering H2 sales growth of 7.0%, through improved product availability, as the product flow challenges experienced in the first half were resolved. Price movement averaged 2.2% over the period (H2: 3.1%), incorporating Fashion inflation of 0.4% (H2: 1.4%) with positive underlying volume growth supported by higher sell-through rates. Our Beauty business continues to gain market share, delivering excellent growth of 14.7% over the period and reaffirming Woolies as the Beauty shopping destination in South Africa. As part of our strategy to optimise space efficiency, net trading 1 space decreased by 2.3% relative to the prior comparable period, whilst online sales increased by 22.8% and contributed 6.6% to total FBH sales.


Country Road Group
Following its successful separation from David Jones, CRG completed a significant restructure during the period to reconfigure its operating model and reset its structural economics as a standalone business. This transformation was undertaken in an accelerated timeframe and within a particularly unconducive macro backdrop whereby sustained pressure from high interest rates and living costs continued to impact consumer footfall and spend. Within this context, and the resultant impact of short-term business disruption, sales declined by 5.4% for the period and by 6.8% on a comparable-store basis. Trade performance in the fourth quarter improved significantly, declining by a lesser 0.3% on the prior comparable period, with sales for H2 declining by 4.5%.

Trading statement
– Earnings per share are expected to be between 263.4c per share and 277.3c per share (2024: 277.3c per share), representing a decrease of between 0% and 5%; and
– Headline earnings per share are expected to be between 257.2c per share and 274.8c per share (2024: 352.3c per share), representing a decrease of between 22% and 27%.

The Group’s year-end results are expected to be released on or about 3 September 2025.

Pick n Pay – trading update and board changes

The trading performance of the Company and its subsidiaries (“the Group”) for the 17-week period to 29 June 2025 (“the Period”) reflected further steady like-for-like sales improvement from Pick n Pay Supermarkets and another strong performance from Boxer Retail Ltd. Group (“Boxer”).

Group turnover for the Period increased 4.3%, with like-for-like sales up 3.8%, against the same period last year. The Group views this as a creditable performance in the context of a highly constrained consumer and continued subdued food price inflation.

– Pick n Pay South Africa (SA) like-for-like sales for the Period grew 3.6%. Implementation of the Store Estate Reset Plan resulted in turnover growth lagging like-for-like sales momentum as a consequence of the planned store closures and conversions.
– Boxer turnover for the Period grew 12.1%, with 3.9% like-for-like sales growth. Further detail on the Boxer performance can be found in the trading update released on the Stock Exchange News Service of the JSE by Boxer on 29 July 2025.

Clothing turnover growth in standalone stores (reported within the Pick n Pay segment) for the Period was 17.3% (12.5% like-for-like sales). Clothing benefitted from both strong execution in the Period and a soft base in the comparative period (which was the result of port delays and a late start to winter last year). We expect clothing turnover momentum to soften somewhat as the base normalises in the second half of FY26.

Online sales growth for the Period was 33.0%, driven by continued growth of Pick n Pay asap! and Pick n Pay groceries on the Mr D app.

Pick n Pay SA’s internal selling price inflation for the Period was 1.8%, slightly down on the 2.1% reported for FY25, and well below CPI Food of 4.2%.

Changes to the board
The Board announced that Grant Pattison will join the Board in the first half of 2026 as an independent non-executive director and as a member of the Group Audit, Risk and Compliance Committee, once he has completed his notice period on a previous engagement.

Professor Haroon Bhorat, an independent non-executive director of the Company since May 2020 and currently serving as Chair of the Social, Ethics and Transformation Committee (a role he assumed in May 2025), has been appointed as a member of the Nominations and Corporate Governance Committee, with effect from 5 August 2025

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