Newsletter No.40 04 November 2016
Cecil & Andrew Fenwick accepting their award
Saddler Belts & Leathercraft (Pty) Ltd are proud to announce that we have been awarded the KZN Exporter of the Year Award for 2016 in the Small Business category!!
Other Finalists in the sector were Bata South Africa and BBF Safety Group
Stuttafords submits to business rescue
Department chain Stuttafords has voluntarily submitted itself for business rescue proceedings, it emerged at the weekend. The embattled company has eight department stores and 15 monobrand stores across SA.
The business rescue plan will be presented in February 2017, following the all-important festive trading season, CEO Robert Amoils said on Saturday.
Once the grand dame of SA department stores, the 158year-old chain has reduced its reliance on high-margin house brands, repositioning instead as a purveyor of global brands, a strategy that has mostly failed as South African shoppers increasingly trade down and shift towards lower-priced products amid SA’s economic malaise.
Price points at Stuttafords, which carries labels like Gap, Ted Baker and Tommy Hilfiger, have been escalating as a result of import duties and the devaluation of the rand. This has put off well-heeled consumers, who travel and shop abroad and are au fait with brand positioning.
The retail environment has been tough in SA, with the country’s largest clothing company, Edcon, on the brink of business rescue earlier in 2016. Its creditors agreed to swap R20bn of debt they were owed into equity in order to continue trading.
Exactly a year ago, Platinum Group, the owner of homegrown brands like Aca Joe, Hilton Weiner and Jenni Button, was placed into business rescue and later liquidated following a slew of legal battles with property groups including Liberty and Hyprop.
“Should a business rescue plan not be adopted, the worstcase scenario is liquidation,” Amoils said.
John Evans from RS Advisors and Neil Miller from Mazars have been appointed as joint business rescue practitioners.
The business rescue proceedings are also believed to have been galvanised by shareholder dissension between Stuttafords’s main owners, the Ellerine family, and the Vestacor consortium, which includes the Rubenstein family and a number of smaller shareholders.
Tensions are said to have been mounting since an abortive listing attempt three years ago, when the group was not producing enough profit after interest and tax to finance a desperately needed revamp.
Amoils said that management was desirous of taking a “far greater” shareholding in the business. “Management can [then] control the business rather than be beholden to either of the shareholders. Ultimately, it’s a perception of risk,” he said. “Both families, who are very well established and wealthy, have put a lot of money into Stuttafords over the past 10 years. A view has been taken that a retailer in this particular [economic] market in SA doesn’t necessarily justify further investment.
“Their view is that they would rather be in liquid assets, preferably listed shares,” Amoils said. He declined to say which of the two main shareholders held this perspective.
However, a portfolio manager, who could not be named in line with company policy, said: “I think management is living in a dreamland, the landlords don’t like this story. This is not a saleable business, they have run out of money and it has zero brand equity. After Christmas, when they’ve discounted the hell out of all the brands to get rid of the stuff, these stores will close. The Ellerines and the Rubensteins have fallen out – it is no secret. The Ellerines refuse to put more money into this thing. Hyprop wants to boot Stuttafords out of its Canal Walk shopping centre and put H&M in that space.”
Canal Walk is owned by Hyprop Investments (80%) and Ellerine Bros (20%).
Absa Investments analyst Chris Gilmour said that Stuttafords had limped along for many years.
“For years I’ve walked passed Stuttafords stores and they always appear to be empty – never pumping – like the operation is a front for something else. It’s been a strange, rather cagey operation for many years. There may be instances where business rescue has worked – I don’t know of any though,” he said.
Source: Business Day
Cape Union Mart acquires children’s clothing retailer Keedo
Cape Union Mart Group says it has acquired Keedo, a South African designer and manufacturer of quality children’s clothing.
Keedo adds 25 stores and a factory to Cape Union Mart Group’s retail footprint of nearly 220 stores and their K-Way factory. The group now provides employment to approximately 3,000 people.
While Keedo will be wholly owned by Cape Union Mart Group, the fourth generation family business privately owned by the Krawitz family, the chain will continue to operate independently under the stewardship of Nelia Annandale.
The Cape Union Mart Group currently comprises four national retail chains. Cape Union Mart, is South Africa’s leading retailer of outdoor equipment and apparel. Poetry, focusses on clothing, homeware and eclectic gifts for the modern woman. Old Khaki is aimed at casual wear for trendy young men and women.
Tread & Miller is the Group’s youngest chain, focussing on urban footwear. The first Tread & Miller store opened a year ago and has already grown into a 20 strong chain.
Nigerian bank introduces N50 bn textile intervention fund
Central Bank of Nigeria (CBN) has introduced an intervention fund of N50 billion to revive the cotton, textile garment sector of the country The fund will be given to beneficiaries of the bank to facilitate takeover of existing debts and provide working capital and long term loans to Nigerian textile and garment manufacturing companies.
The intervention fund will be provided to 40 beneficiaries belonging to the entire textile value chain, stated acting managing director of Bank of Industry (BOI) Waheed Olagunju at a textile forum held in the Nigerian city of Abuja. CBN already released an amount of N13.37 billion that has been paid to a few beneficiaries, according to Nigerian media reports.
“As part of its efforts to promote the development of the textile and garment sector, the CBN recently put in place a N50 billion special intervention facility to facilitate takeover of the existing debt as well as provide additional long term loan and working capital facility to existing companies in the cotton, textile and garment sectors,” said Olagunju.
He also added that the BOI and the Federal ministry of industry, trade and investment is working together to find solutions for issues like smuggling, counterfeiting and patronage of locally made goods.
Additionally, BOI has approved loans amounting to N60 billion for 70 projects under the cotton value chain.
The government of Lesotho aims to localise the textile manufacturing industry of the country which is currently dominated by foreign investors. For this purpose, Joshua Setipa, Lesotho’s minister of trade and industry has promised to provide subsidised factory spaces as well as credit lines to local garment manufacturers.
The textile sector of Lesotho is the largest employer in the country’s private sector with over 40,000 workers and the government aims to make it sustainable for the long term. Foreign investors may shift base to other countries like Cambodia after 10 years and thus Lesotho will not be able to achieve the sustainability that it wants, believes Setipa.
Agreements like the US Africa Growth and Opportunity Act (AGOA) encouraged foreign firms to invest in the garment manufacturing industry of Lesotho. Introduced in the year 2000, the agreement allows more than 6,400 products manufactured in sub-Saharan African countries to be exported duty-free to the US.
Lesotho benefitted from the agreement and increased its garment exports to the US from $140 million in 2000 to $330 million in 2015. Currently, the country exports close to 80 per cent of its textiles and garments to the US, said African media reports. It produces over 100 million garments annually.
The minister also promised a bigger factory space for Afri Expo, a small business that produces garments for major South African retailers.
This move is likely to help local manufactures like Afri Expo to expand their business and take a major share in the country’s textile and garments exports.
Did you Know………
The first miniskirt was unveiled by designer André Courreges in 1965. It ended a modest four inches above the knee.
During the 1860s, dresses were so wide that women were often stuck in doorways.
South Korea used to have actual fashion police who would go around measuring the miniskirt length of women. If skirts were deemed too short, they could be fined or arrested.
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