Newsletter No 42 / 5 November 2021                           

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TFG begins rollout of standalone Jet Home stores

The launch of standalone Jet Home stores commenced on 28 October, with store locations that include Pritchard Street, Heidelberg Mall, Kenako Mall, East Rand Mall and N1 City.

The new stores mark the expansion of the Jet Home brand, which exists inside the majority of Jet stores countrywide. The full Jet Home collection is also available in 40 selected Jet stores.

“Our home range expands beyond bedroom and bathroom and now includes kitchen, outdoor and decor product ranges at the best value,” said Shane Van Niekerk, Jet MD.

Capitalising on market opportunity

TFG, which purchased Jet from Edcon in a R480m deal that was finalised last year, had stated its intention to roll out standalone Jet Home stores in 2021 after reintroducing the Jet Home brand earlier this year.

“Another opportunity that Jet unlocks for us is in the value homeware segment. Back in 2016, Jet Home was doing a turnover of close to R2m. This was then neglected and dwindled to almost nothing over the next couple of years,” said TFG CEO Anthony Thunström in June.

Thunström added at the time, “We are now very excited to be relaunching Jet Home in 345 selected and suitably sized Jet stores. The market opportunity is significant, it is around R12bn, and we want to see Jet have an appropriate share in this and we are going to grow it over the next couple of years.”
At the time of the Jet takeowner, TFG said that the Jet acquisition marked a strategically important expansion for the Foschini owner into the value segment of the southern African retail apparel market, and that it established a value pillar for the TFG business that would be costly and difficult to replicate organically.

Fashion as protective shield: are antiviral outfits on the rise?

By Regina Henkel

Diesel

In the health and sports sectors, antiviral functions have been known and used for a long time. In fashion, they were previously thought of as superfluous. That has changed since the pandemic.

Back in 2020, at the very beginning of the pandemic, a picture of Naomi Campbell went around the world: the model was photographed at an airport in a white full-bodysuit, wearing a face mask and rubber gloves. What may have seemed exaggerated at the time is actually a very obvious idea: clothing can be used as a protective shield against invisible enemies such as viruses and bacteria. The technologies for this have long been available. They are regularly used in workwear for the healthcare sector and in sports collections, where they avoid unpleasant odours by preventing the growth of bacteria.

New antiviral equipment

In view of Covid-19, these technologies have been further improved and adapted in recent months. Several textile chemistry companies have launched new or further developed antiviral finishes at a tremendous pace, for example Polygiene from Sweden with its “ViralOff” finish, HeiQ from Switzerland with its “Viroblock” technology, Affix Labs from Finland with “Si-Quat,” Devan from Belgium with “Bi-Ome AV” and Toray from Japan with “Makspec V.” All manufacturers promise that their products can reliably kill many different viruses and bacteria within a few minutes or hours. Clothing equipped in this way therefore not only protects its wearer from the penetration of harmful germs, the germs are actively eliminated by the clothing, making them harmless to everyone.

Fashion as protective shield

After an initial wave of antiviral face masks released by Maloja, Mammut, or Burberry, for example, some fashion companies began to integrate antiviral products into their collections or even treat entire categories with them. Just a few weeks after the pandemic broke out, Italian denim brand Diesel launched its first antiviral jeans for the F/S 2021 season, using Polygiene’s “ViralOff” finish. Similarly, denim brands DL1961 and Warp + Weft have teamed up with HeiQ to give all future denim models HeiQ “Viroblock” antiviral treatment. The same is true for menswear supplier Monobi Fashion of Italy who is using it to add antivirals to jackets and jumpsuits. In October 2020, a startup called BioRomper also launched in the U.S. with a single product: an antimicrobial jumpsuit designed to prevent surface contamination while traveling. There are also early adopters in high fashion: designer Phillip Lim presented his “Live Free” antiviral collection in November. His goal: to make people’s lives easier.

Antiviral collections – a new trend?

Whether we will actually encounter this equipment more frequently in the future is far from decided. HeiQ was already supplying around 500 customers at the beginning of the year. Polygiene reported a 141 percent jump in sales in the first quarter of 2021, driven by continued demand for ViralOff. “We will probably have to get used to living with the threat of viral infections, which means using protective clothing will have to become a part of our daily lives,” says Chief Marketing Officer Hoi Kwan Lam of HeiQ. “This fact has not gone unnoticed by brands who are now jumping on the bandwagon in growing numbers and adding antiviral protective gear to their textile products.”

At the moment, the different legal frameworks in different countries speak against a broad, international roll-out of antiviral fashion. Not every product is approved internationally. Toray’s “Makspec V” antiviral finish, for example, has so far only been approved in Japan, but it should soon be possible to use it in international collections. “We have received positive responses from Japanese garment manufacturers, mainly for uniforms worn by staff in hospitals, hotels, restaurants and other hospitality businesses, as well as educational institutions,” says Toray’s Taira Kurosawa. “We believe the use of antiviral materials in uniforms for the service and hospitality industries will increase in the future.”

New scopes or application

Most finishes survive around 30 washes, after which they lose their effectiveness if not refreshed. To enable consumers to do this themselves, manufacturers such as HeiQ and Affix have developed sprays. In this form, they can also become interesting for fashion retailers: “Studies show that viruses can remain active on the textile surface for two days or more at room temperature,” explains Carlo Centonze, co-founder and CEO of HeiQ. “This is also why in some countries, such as the UK, it is now mandatory to ‘quarantine’ garments after each fitting. At the request of many of our customers, we have turned HeiQ ‘Viroblock’ into a spray they can use in their stores to ‘clean’ products after touching or trying them on.” The sprays adhere to many surfaces, not just clothing. As a result, their applications extend far beyond the apparel industry – from automotive interiors to mattresses, bedding, curtains and tablecloths in the hospitality industry. The fact is that the pandemic has significantly changed our need for protection. The fight against viruses and bacteria is now also taking place on textile surfaces.

This article was originally published on FashionUnited.de. Edited and translated by Simone Preuss.

Ethiopian textile industry at risk if US suspends trade deal over Tigray war

By Dawit Endeshaw

Employees of the Sammy Ethiopia hand made garments, hand-woven textiles and basketry factory package scarfs for export to US clients, at the factory in Addis Ababa, Ethiopia, 14 October 2021. Reuters/Tiksa Negeri

In a crowded Addis Ababa factory, Finoteselam Nigussie’s needle plunges in-and-out of the gauzy white cloth she deftly guides through a sewing machine.

Like thousands of other Ethiopian women, stitching shawls for export to the United States pays the 40-year-old textile worker’s rent and her daughter’s school fees. Now though, Nigussie’s job is in danger as the United States ponders suspending Ethiopia’s duty-free market status, citing abuses and a growing famine in the war-ravaged northern Tigray region.

Suspension of benefits under the African Growth and Opportunity Act (Agoa) would threaten Ethiopia’s aspirations to become a light manufacturing hub and dent hard-won economic gains in a nation once a byword for hunger and poverty.

“We have used Agoa since we started business,” said Nigussie’s boss Sammy Abdella, who set up the company nearly two decades ago and employs 250 people. “People … have worked with us since we have started. We have created a family,” he added, his voice cracking.

Although Ethiopia is not a large global supplier, suspension of its US trade status would be yet another problem on the list for global fashion brands such as The Children’s Place, Tommy Hilfiger and Calvin Klein as Covid-19 disrupts manufacturing capacity, ports and supply chains.
War horrors
Washington has repeatedly expressed concern over widespread reports of sexual violence by Ethiopian and allied Eritrean soldiers in Tigray, where local forces have battled the military and its allies for a year.

The United Nations says a de facto blockade of aid has forced 400,000 people into famine. On Thursday, it said no food convoys had entered Tigray for the past 10 days. There have been many reports of mass killings of civilians.

The government has denied blocking aid and said individual soldiers have been tried for any abuses, without giving details. Eritrea has denied committing abuses.

Washington has already laid the ground for sanctions, with its chief trade representative promising a decision soon on its Agoa status.

The act gives sub-Saharan African nations duty-free access to the United States if they meet criteria including removing barriers to US trade and progress towards political pluralism.

Prime Minister Abiy Ahmed’s chief trade negotiator Mamo Mihretu told Reuters that Agoa had directly created 200,000 jobs and indirectly created millions. “We should not politicise trade issues,” he told Reuters.

Over the past decade, Ethiopia has spent billions constructing a dozen industrial parks and related infrastructure. Some factories produce goods for fashion giant PVH, owner of the Calvin Klein, Speedo and Tommy Hilfiger labels.

At Nigussie’s company, Sammy Ethiopia, around 90% of products are exported to the United States, via retailers such as Eileen Fisher and Anthropologie. Exports to the United States account for three-quarters of the firm’s annual turnover of over $200,000. If Ethiopia is suspended, Abdella said his company will close.

Ethiopia exported about $237m worth of goods duty-free to the United States under Agoa in 2020, US commerce department data shows, more than 90% of its textiles and apparel.

Duty-free access is a major draw for companies including Gap and Sweden’s H&M. The full impact a suspension on foreign investors and Ethiopian companies exporting to the United States is not yet clear, with layoffs and order cancellations possible.

‘Added headache’

Mihretu warned an Agoa suspension would hurt US companies trying to diversify production from Asia by relocating or expanding to Ethiopia.

Conlumino, a retail research agency and consulting firm, noted, however, that Ethiopia’s textile exports to the United States were still minuscule compared to the likes of China, Bangladesh and India.

Though Ethiopia would suffer from an Agoa suspension; retailers will find alternatives despite the havoc from Covid-19, said Neil Saunders, a Conlumino analyst.

“The suspension of Agoa will not have a huge impact on clothing retail,” he said. “However – as this will come at a time when global manufacturing capacity is already reduced and retailers are struggling to keep up with demand – it is an added headache.”

An H&M spokesperson said the company was following developments regarding Agoa carefully, but it was too early to comment. In December, H&M said its long-term manufacturing and sourcing strategy involves Ethiopia and it did not plan to change. But its Ethiopia production is comparatively small.

US-based apparel companies The Children’s Place, Gap and PVH did not respond to requests for comment.

A senior PVH official previously said the 10-year renewal of Agoa in 2015 “was a critical factor in PVH’s decision to invest”, according to a 2017 case study of PVH in Ethiopia published by the World Bank and co-authored by Mamo.

In 2018, PVH said Ethiopia could become a top supplier because it grows cotton, dyes fabrics and sews garments. It established a joint venture to operate a factory in Hawassa city, the company’s first such venture in 30 years.

Raghavendra Pattar is CEO of Nasa Garment, a manufacturer in Hawassa Industrial Park. Nasa exports about 95% of its garments to US companies. It employs 1,200 workers, mostly women, and spent $7m to set up the factory two years ago.

But an Agoa suspension would halt expansion.

“Agoa … is the reason buyers are coming to Ethiopia and sourcing manufacturing here,” he said. “If the duty benefit is taken away, the buyers will go to another country.”   Bizcommunity

Foschini – trading update and trading statement

Trading Update
Salient features
– Solid performance in Q2 FY2022 with Group retail turnover growth of 18,0% compared to Q2 FY2021, notwithstanding the impact of the civil unrest in South Africa and the government-enforced lockdowns in Australia;
– Robust performance from TFG Africa in Q2 FY2022 with retail turnover growth of 28.0% compared to Q2 FY2021;
– Cash retail turnover growth for TFG Africa in Q2 FY2022 of 37.1% compared to Q2 FY2021. Cash retail turnover now contributes 69.9% to total TFG Africa retail turnover and 79.1% to total Group retail turnover;
– Continued market share gains in Mens and Womens categories according to the Retail Liaison Committee (increase in market share of 4.8% for H1 FY2022 compared to H1 FY2021);
– TFG London’s performance continued to improve in Q2 FY2022 with retail turnover growth of 41.8% compared to Q2 FY2021, well ahead of management expectation;
– TFG Australia’s comparable store retail turnover growth remains strong in “open” states, exceeding expectation. Overall, however, Q2 trade was severely impacted by lockdowns in the two key States where in excess of 21 000 trading days were lost; and
– Group online retail turnover grew 19.3% in Q2 FY2022 off a significantly high base in Q2 FY2021, contributing 11.7% (Q2 FY2021: 11.5%) to total Group retail turnover.

Updated trading statement
Further to the TFG trading statement which was published on SENS on 7 October 2021, we are providing an update on the guidance on the Group’s expected results for the six months ended 30 September 2021 (‘current period’).

Shareholders are advised that earnings per share (‘EPS’), diluted EPS, headline earnings per share (‘HEPS’) and diluted HEPS for the current period compared to the six months ended 30 September 2020 (‘prior period) are expected to be within the ranges reflected below:

Reported Six months ended 30 September 2020 (cents) and Expected Six months ended 30 September 2021 (cents and %)
Basic earnings per ordinary share – 161.5; 302.0 to 334.3; 87.0% to 107.0%
Diluted earnings per ordinary share – 161.0; 301.1 to 333.3; 87.0% to 107.0%
Basic headline earnings per ordinary share – (91.0); 384.0 to 402.2; 522.0% to 542.0%
Diluted headline earnings per ordinary share – (90.8); 383.2 to 401.3; 522.0% to 542.0%

Restated^ Six months ended 30 September 2020 (cents) and Expected Six months ended 30 September 2021 (cents and %)
Basic earnings per ordinary share – 147.7; 289.5 to 333.8; 96.0% to 126.0%
Diluted earnings per ordinary share – 147.3; 288.7 to 332.9; 96.0% to 126.0%
Basic headline earnings per ordinary share – (83.3); 384.8 to 401.5; 562.0% to 582.0%
Diluted headline earnings per ordinary share – (83.1); 383.9 to 400.5; 562.0% to 582.0%

^ As required by IAS 33, the basic and diluted weighted average number of shares for the prior corresponding period have been adjusted retrospectively to account for the bonus element arising from the rights issue

The Group’s financial results for the six months ended 30 September 2021 will be released on SENS on or about 11 November 2021.

Mr Price – trading statement

The group is presently finalising its interim financial results for the six months ended 2 October 2021 (the Period). These will be announced on the JSE Stock Exchange News Service (SENS) on or about Thursday 25 November 2021.

Shareholders are advised that headline earnings per share (HEPS) is likely to be between 30% and 40% higher than the period 4 April to 26 September 2020 (Corresponding Period) and normalised HEPS between 40% and 50% higher (as detailed below), as reflected in the table below.

The group’s anticipated increase in HEPS for the Period is attributed to an improved retail trading performance against the Corresponding Period. In this affected base, all the group’s South African stores were closed during the nation-wide lockdown between 27 March and 30 April 2020, with additional subsequent trading restrictions enforced due to the COVID-19 pandemic. HEPS declined 24.8% in this Corresponding Period.

As a result, the group advises that it expects the interim results for the Period to fall within the following ranges:
*Basic earnings per share: 421.2c to 450.3c
*Headline earnings per share: 433.6c to 466.9c

f the looted stores since the looting despite not being able to trade and generate income. The associated business interruption losses continue to be assessed and the group anticipates further insurance payments to be received in H2 FY2022 and H1 FY2023.

Interim results presentation
A live webcast of the interim results presentation is scheduled for 09:00 am on Thursday, 25 November 2021. This can be accessed through the following link: www.corpcam.com/MrPriceGroup25112021.

The normalised HEPS is considered to be pro forma financial information in terms of the JSE Listings Requirements. This information is the responsibility of the group’s directors, has been prepared for illustrative purposes only and may not fairly present the group’s financial position, changes in equity, cash flows or results of operations.

Massmart – sales update

The 2021 financial year has been characterised by a softer consumer environment, exacerbated by the negative effects of the social unrest. This has weighed negatively on retail sales, with consumers prioritising spend on non-discretionary items. Overall retail sales were subdued in August, following the July civil unrest as retailers assessed the damage and began to restore operations.

In addition, Massmart, where liquor normally contributes around 15 % of overall merchandise mix, continued to feel the negative effects on liquor trading restrictions that resulted in 110 days of lost trade and that particularly undermined retail liquor sales.

The Massmart turnaround plan continues to be implemented as scheduled and management is confident that despite the recent headwinds, the strategic growth initiatives announced are bearing fruit and we fully expect this to gain momentum and continue in the medium to long term. This is clearly evident in cost saving measures arising from our Smart Spend programme that has resulted in sustainable group wide efficiencies arising from significantly improved ability to consistently leverage group-wide scale from a dedicated Indirect Spend Management team reporting to the Group Chief Financial Officer. Total improvements now top R1.3 billion and are on track to achieve our target of R1.9 billion.

Total sales
Massmart’s total sales for the 39-week period ended 26 September 2021 amounted to R60.6 billion, increasing by 0.2% over the prior year, with comparable store sales increasing by 2.9% over the same period. Comparable stores sales account for the impact of stores opened or closed during the period, and also for the impact of stores damaged as a result of the civil unrest and unable to trade. Sales from our South African stores amounted to R55.4 billion, increasing by 1.2% on the prior year, with comparable store sales increasing by 4.4%. Total sales from our ex- South Africa stores amounted to R5.2 billion, translating to a 9.2% decline in Rand terms compared to same period last year, with comparable stores decreasing by 9.9%. Sales in the Rest of Africa was impacted by local currency weakness. In constant currency, sales from our ex- South Africa stores increased by 1.8%, with comparable store sales increasing by 0.9%.

Update regarding the impact of civil unrest in South Africa
As previously communicated, the civil unrest that took place in KwaZulu-Natal (“KZN”) and in parts of Gauteng in July 2021 resulted in a total of 43 stores and two distributions centres being directly impacted. We are proud of our associates and partners for their efforts in ensuring that the affected stores become operational as soon as possible. Of the 43 impacted stores, 25 stores have resumed trading by the end of September, and the group estimates that another 9 stores will be re-opened by the end of December 2021. Due to the extent of the damages suffered, the balance of stores are expected to re-open in 2022, including the Makro store in Pietermaritzburg that was destroyed by arson. The severe impact of the loss of our Riverhorse distribution facility in KZN, which was also destroyed by arson, has been offset by a successful shift of replenishment capabilities into other distribution facilities to ensure continuity in the replenishment cycle for all of our stores, in addition to a new distribution facility in Gauteng being brought online in September, earlier than expected.

The group estimates that the total replacement cost for property and stock damages suffered as a result of the civil unrest to be R2.5 billion of which R1.3 billion relates to inventory losses. This material impact is primarily due to two Makro stores (Pietermaritzburg and Springfield) and two Distribution Centres in KZN (Riverhorse and Cato Ridge) being looted and extensively damaged. The Makro in Pietermaritzburg and the Riverhorse DC was completed destroyed by arson. The group does have SASRIA insurance cover for the fixed asset and stock losses suffered, however, as previously communicated, the SASRIA cover is not sufficient to cover the full extent of the losses. The expected net loss for the group after taking the insurance cover into account is estimated at R650 million. Shareholders are advised that the accounting for the gross losses and insurance proceeds will likely take place in different reporting periods, depending on when the claim is finalised and approved by SASRIA. An interim insurance payment of R500 million was received in September 2021. The assessment of the business interruption (BI) losses is still ongoing. The group is comfortable that it is adequately covered for the full extent of the BI losses through a non-SASRIA policy. An interim payment for BI losses is expected imminently.

Black Friday & Festive Trading
The business is well prepared for the upcoming Black Friday and Festive trading periods. In the case of Black Friday we have, on the strength of customer feedback, extended the promotion to cover the full month of November across our Makro, Game and Builders trading banners all of which have, as part of our new ways of working, collaborated closely to leverage group-wide scale to negotiate deals that will deliver exceptional customer value whilst preserving margins.

Change in leadership
Doug Jones, Senior Vice President and CEO: Massmart Wholesale, has made the decision to take up a job opportunity in Sydney, Australia and will be exiting his current role at Massmart at the end of December 2021.

The leadership of Massmart Wholesale will be handed over to Llewellyn Walters, a seasoned retailer who successfully integrated and settled the various banners that currently comprise the very successful Builders trading banner, when he joined the Massmart Executive Committee in 2008.

The Game and Builders CEO’s, who previously reported to Llewellyn in his retail role, will now report directly to Mitch Slape, the Massmart Group CEO.

                                                                                                                  Did you know……..

The most talked about Oscars dresses of all time

Edy Williams, 1974

So many questions: Is that a leopard-print bikini? What’s with the fur coat? And can someone please explain the dog?

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