Newsletter No.31 18 August 2017
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Long4Life is a shot in the arm for Holdsport
Holdsport’s share price has raced ahead in the past year, climbing 12%. This puts the company way ahead of the general retailers’ index, which has declined by 18% in the same time frame.
While Holdsport has generally held up better than most of its retail peers in the face of a depressed economy, the rally in the share price was sparked by investment firm Long4Life’s decision to make a bid to acquire the company in July. The offer came despite a muted performance by the specialist retailer in the year to February. Holdsport reported a 5.8% rise in sales, but a fall in profit of 11.4%, to R273.7m.
Chief financial officer Cobus Loubser said on Thursday a tie-up with Long4Life would provide Holdsport with access to Long4Life’s balance sheet, producing appetite and capacity for growth both acquisitively and organically, and access to its management team with proven deal-making expertise.
“Holdsport has always focused on achieving a high return on funds invested,” said Loubser. “We have an experienced management team that understands the business and our market sector well.
“We have managed to build a good business with a proven track record of high levels of cash generation, resulting in attractive returns and dividends to shareholders.”
The group operates through a network of Sportsmans Warehouse and Outdoor Warehouse retail chains. These chains operate large-format stores mostly located in value centres in recognised retail nodes in SA. The firm also has an expanding wholesale division that designs, manufactures, imports and distributes technical sports and outdoor apparel and equipment under the First Ascent, Capestorm, Second Skins and African Nature brands.
Analysts at consultancy EY said speciality retailers such as Holdsport, provided the strongest returns in 2016 with a 51.6% return on equity, while grocery retailers averaged 22.3% and clothing chipped in a decent 41.1% return.
Long4Life’s bid for Holdsport is a choice between 12.1 of its shares for each Holdsport share, or 11.2 shares plus R5 cash. The cash offer is capped at R204m.
Prospects for sportswear as a category are set to improve as consumer interest in health and fitness booms. A Euromonitor report says sportswear is growing at a faster pace than general clothing and footwear. Sportswear includes athleisure, or sports-inspired clothing.
“Although performance sportswear takes the lead in terms of market size, valued at 78bn in 2016, sports-inspired is the category driving growth,” said Euromonitor International apparel and footwear analyst Bernadette Kissane.
GATCI unveils its first ‘Made in Ghana’ boxer shorts
A new brand of ‘Made in Ghana’ cotton boxer shorts has been launched by the Garment and Textiles Cluster Initiatives (GATCI), a group of professional tailors and dressmakers in the African nation. The product uses African prints and fabric and is much more comfortable in tropical weather compared to those made of polyester and nylon imported from the West.
Deputy minister of trade and industry Robert Ahomka-Lindsay and deputy minister of gender, children and social protection Gifty Twum-Ampofo recently launched the brand, which offers boxer shorts for both men and women, according to news agency report from Ghana.
GATCI works under the Cluster Development Programme (CDP) of the Council for Scientific and Industrial Research – Science and Technology Research Institute (CSIR-STEPRI).
The CDP brings together government agencies, research institutions and entrepreneurs to work towards the growth of small and medium-scale industries.
New transgenic cotton variety soon for Kenyan farmers
A genetically-modified cotton variety with high resistance to boll worm infestation will be released to farmers in Kenya soon. The high-yielding, drought-resistant Bt cotton, which is being cultivated in Burkina Faso and South Africa, brings high financial returns, according to Charles Waturu, director of Horticultural Research Institute in Thika.
The variety will be initially released to farmers in dry irrigation areas of the coastal region for seed breeding purpose as part of the pilot project and rolled out later to all other cotton-producing counties, a news agency report from Kenya quoted Waturu as saying.
The horticulturist, while speaking at a recent national training and awareness programme for farmers on transgenic crops in Sagana town, said the transgenic variety requires two sprays of pesticides compared to 15 for the traditional one. Due to the high reproduction rate of the boll worm and self protection mechanism, its chemical control was difficult and many farmers have abandoned cotton farming, he added.
Waturu said the government has already established a task force that is working for a roadmap towards the expected release of the Bt cotton seed to the farmers by 2019.
The transgenic cotton variety also attracted honey bees during the flowering stage, which offered quality honey to the farmers.
Did you know………
– Did you know it was Mark Twain that invented the bra strap clasp?
– Icelandic Folklore says that if a person didn’t get new clothes for Christmas, a giant Yule Cat would eat them up.
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