3 of 2023

Newsletter No 3/27 January 2023                              


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#BizTrends2023: Sustainability – an overriding trend in fashion

Lucilla Booyzen, CEO at SA Fashion Week. Source: Supplied

Fashion has largely been viewed as a frivolous industry, dominated more by who’s wearing what designer at which social event, rather than the powerhouse industry that it is: a major contributor to GDP in many countries.

Trends are newly defined each season by the luminaries of the fashion world and are introduced, lavishly, on the platforms of the world’s fashion capitals, greedily absorbed by the large-chain retailers who will have their copies displayed, worldwide, on the rails of their stores within days. This was the norm until Covid-19 appeared on the scene and the great reset clicked in.

Turning point towards consciousness

The onset of Covid proved to be the turning point towards a new consciousness that brought to the fore issues like climate change, food security, supply and trade blockages, energy shortages and political turmoil culminating in Russia’s invasion of Crimea. In a matter of two years, the thinking around the future of humanity on earth was turned on its head.

These changes also impacted enormously on the traditional rules that have determined fashion trends for decades. Sustainability became the overriding trend of anything goes.

Unsustainable practices in the production of clothing had already become a huge issue with the climate lobby before 2020 and the reality hit home during Covid when changes simply had to be made to keep the fashion industry viable.

Design had to be informed by sustainable, responsible or compostable fashion design; a trend focused on the move forward.

Local designers at the forefront of sustainable fashion

In South Africa, social, economic and geographic circumstances which had previously been viewed as being negatives, in the current climate of sustainable fashion, may be turned around to the advantage of our designers who have long had to work in an environment of:

  • Smaller design studios where they supply smaller quantities thus consuming less energy and practising slow fashion.
  • Less automation concerning their design methods and processes resulting in lower energy consumption.
  • Practicing Fair Trade as a result of being fully invested in women empowerment, utilisation of local labour, fair local wages to their employees and supplying at going rates.
  • Their production teams are smaller and localised, with more focus on educating and upskilling – no exploitation of their workforce.
  • The designers build strong, reliable, long-lasting and personal relationships with every link in the supply chain.
  • Most of the designers’ price points are competitive – they either use local natural fibres or compostable fabrics that they can print on creating their own identity.
  • Building a client base is close to their studios – allowing for a limited carbon footprint.
  • They are close to their communities so they are building job opportunities and wealth from within.
  • Their collections are easily traceable – their supply chain is limited.
  • They are fur-free.
  • They don’t drive over demand – they manufacture only when required rather than in large batches, which cuts down on every level of the value chain. This puts them firmly into the camp of the slow fashion movement which reduces impact on the environment.

These factors place South African fashion ahead of international designers in terms of the driving trend of sustainability.

In terms of marketing South African fashion, the main role of SA Fashion Week remains to guide the vision of the designers and to provide a discernible and vibrant media platform that gives exposure to African, and ultimately, international markets.  Bizcommunity

Agoa shows US has successfully courted Africa

By Gracelin Baskaran

US treasury secretary Janet Yellen. Picture: Shelby Tauber/Reuters

The African Growth & Opportunities Act spurs manufacturing and has been a tool for human rights

US treasury secretary Janet Yellen is in town this week. While news headlines have focused on the overlapping visits to the continent of Yellen, Russia’s Sergey Lavrov and China’s Qin Gang, Yellen’s comparative advantage is marked. She’s a pre-eminent economist — the first to have led the Federal Reserve, the White House council of economic advisers and the treasury — and she’s here to leverage that experience to build US-Africa relations.

Fellow columnist John Dludlu recently suggested Washington’s overtures to Africa are likely to fail, in part because the US has lost its race to court Africa through trade. (“Too little, too late for the US to counter China in Africa”, January 18). I disagree.

In 2000, then US president Bill Clinton signed the African Growth & Opportunities Act (Agoa), which gave Sub-Saharan African countries a competitive edge by unilaterally allowing them duty-free exports for 6,500 products to the US. In 2021 Africa exported $4.8bn in non-oil goods to the US through Agoa — that’s more than the GDPs of 13 African countries.

When discussing US-Africa trade there are three evidence-backed points to be made: without Agoa, some smaller Sub-Saharan African countries would never have developed a private sector; when countries have had their Agoa benefits suspended it’s led to an exodus of investment, indicating that the competitive edge Agoa offers is vital to investors; and Agoa has become an economic diplomacy tool the US has leveraged to reduce human rights abuse. Whether it’s the best tool for the purpose is up for discussion.

Agoa has clearly been the driving factor behind the development of the private sector in some Sub-Saharan African countries. In Lesotho, the manufacturing industry grew from a handful of factories in the 1990s to become the largest private sector employer after Agoa was instated, providing employment for 40,000 people and exporting mainly American brands such as Old Navy, Walmart and Levi’s to the value of about $250m.

China has never provided any incentives to attract investment to Lesotho. On the contrary, China’s manufacturing firms came to Lesotho so they could benefit from Agoa and tap the US market. When Agoa benefits are withdrawn evidence from multiple countries shows investment leaves — including Chinese firms.

In 2011 Eswatini exported $73m in textiles and apparel to the US through Agoa. In 2015 the US suspended Eswatini’s Agoa benefits due to its poor labour and human rights record. Many of the 30 (largely Chinese-owned) textile and apparel factories immediately relocated.

China didn’t step into the breach and provide similar incentives to retain investment. In 2017, after Eswatini resolved its ills, Agoa was reinstated and a national Agoa utilisation strategy was developed to increase exports from Eswatini to the US and boost US investment.

We’re seeing a similar script play out in Ethiopia. In 2016 I visited the bustling industrial park in Hawassa, which hosted factories producing for H&M and PVH, whose brands include Tommy Hilfiger and Calvin Klein. In 2021, two weeks after President Joe Biden announced Ethiopia’s suspension from Agoa’s benefits for gross human rights violations, PVH announced that it would close its factories. It’s hard to prove causation, but the correlation is strong.

Agoa offers a unique insight into the divergent approach the US and China have taken on the African continent. I want to preface this carefully — I believe targeted sanctions are generally preferable to economy-wide ones, because the latter can put thousands out of work.

The US decided to suspend Ethiopia’s Agoa benefits as it worked on targeted sanctions. It was a significant blow. It would have been easier for the US to do nothing — after all, the Ethiopian government has been a strategic ally in the Horn of Africa, where radicalisation and instability are rife.

Shortly after the AU brokered a ceasefire, Ethiopian Prime Minister Abiy Ahmed requested that Agoa benefits be reinstated. He clearly realised its value.

I am uncomfortable that China didn’t lift an economic finger to incentivise Ethiopia to end a war that’s killed upwards of 500,000 people. It simply watched from the sidelines. Silence is complicity.

The argument that US hasn’t “courted” Africa through trade is unfounded. Africa. Agoa has been a backbone for building a competitive private sector, generating jobs (350,000 direct jobs and over a million indirect jobs), and increasing revenue. It’s courted it, within the parameters of decency, rather than at the expense of it.

In next week’s column I will critically assess the question of whether African countries have really been drawn to the “warm embrace” of China.    BL

• Dr Baskaran (@gracebaskaran), a development economist, is a bye-fellow in economics at the University of Cambridge.

TFG – trading update for Q3 FY2023

TFG Africa recorded a strong performance in Q3 FY2023 with retail turnover growth of 18,4% and like-for-like retail turnover growth of 5,7%. In the UK, inflation continues to outpace wage growth, further straining the discretionary budgets of many households. The Group achieved a record Black Friday and Cyber Monday with turnover exceeding R1 billion over these two days.

Mr Price – trading update

During the third quarter from 2 October 2022 to 31 December 2022 of the financial year ending 1 April 2023, the group recorded growth in retail sales and other income of 34.0% to R12.4bn. Supported by the inclusion of the recently acquired Studio 88 Group (S88), this is the highest Q3 sales level achieved in the history of the group.

Retail sales grew 36.5% to R12.0bn and on a 2-year CAGR basis grew 26.4%. Comparable store sales decreased 3.9%. South African retail sales grew 36.8% (excluding S88: 1.5%) to R11.2bn while non-South African corporate-owned store sales increased 32.5% (excluding S88: -3.3%) to R816m. Total store sales increased 38.0% (excluding S88: 1.8%). Online sales decreased 3.1% (excluding S88: -6.1%, off a strong growth of 51.8% in the prior period).

Loadshedding levels are anticipated to worsen in Q4 FY2023 which will continue to burden business effectiveness. The challenging consumer environment is expected to continue into FY2024. While the short term will be challenging, management remains focused on the execution of its long-term vision.

Woolies – updated trading statement

The Group’s turnover and concession sales for the 26 weeks ended 25 December 2022 (‘current period’ or ‘period’) increased by 18.5% compared to the 26 weeks ended 26 December 2021 (‘prior period’) and by 16.3% in constant currency terms.

The Fashion Beauty Home (‘FBH’) turnaround strategy continues to gain traction. Turnover and concession sales grew by 11.2%, and by 11.0% on a comparable store basis, and strengthened to 12.0% in the last six weeks of the period. The Food business grew turnover and concession sales by 7.6% and by 5.4% on a comparable store basis, with sales growth accelerating to 8.6% in the last six weeks of the period. The Woolworths Financial Services book reflects a year-on-year increase of 17.2% to the end of December 2022, driven by improved consumer spend, as well as new business and credit card advances.

The businesses in ANZ continued their positive momentum, notwithstanding the increased inflationary pressures faced by consumers during the period. Country Road Group sales grew by 25.5% and by 26.6% in comparable stores. David Jones’ turnover and concession sales increased by 31.8% and by 27.6% on a comparable store basis, with our flagship and CBD stores performing ahead of expectations.

Further to the announcement released on SENS on 16 November 2022, earnings per share (‘EPS’), headline EPS (‘HEPS’) and adjusted diluted HEPS (‘adHEPS’) for the current period are expected to be within the ranges:

December 2022 expected increase (%); December 2022 expected range (cents)
*EPS: 70.0% to 80.0%; 285.4c to 302.2c
*HEPS: 70.0% to 80.0%; 285.9c to 302.8c
*AdHEPS: 70.0% to 80.0%; 275.7c to 292.0c

David Jones will be reported as a discontinued operation in the Group’s Interim Results, which are scheduled to be released on SENS on or about 1 March 2023.


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Fast Fashion Facts You Might Not Know

Fast Fashion Companies Generate More Pollution Than International Aviation and Shipping Combined 

Given its business model, fast fashion is inherently among the most environmentally damaging industries in the world and it is contributing to global pollution and climate change in an astronomical way. If fast fashion were a country, its carbon emissions would rank almost as high as the entire European continent. The emissions derive not only from the manufacturing process itself but also from the shipment of clothing around the world, as well as their disposal.


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