44 of 2023

Newsletter No 44/10 November 2023                              



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Pepkor warns of fall in annual profit as consumers struggle

by Nico Gous And Katharine Child

An employee at a checkout desk inside a Pep store. Picture: Bloomberg| Nadine Huttton

The low-cost retailer sees headline earnings per share shrinking 5.2%-15.2%

Low-cost retailer Pepkor has flagged a drop in annual profit as power cuts, unemployment and increased living costs cut into the disposable income of its customers.

“Their ability to earn an income remains negatively impacted by high unemployment, continued electricity supply interruptions as a result of load-shedding and disruption in the payment of social grants,” the company said on Thursday about its coming annual results announcement.

As a result, the owner of Pep, Ackermans, Tekkie Town and other retail brands says that it expects its headline earnings per share for continuing operations to fall 5.2%-15.2% year on year to 138.3c-154.6c, and earnings per share for continuing operations, which includes the year’s impairment of R6.6bn, will go from 166.6c to a loss of 24.5c-41.1c.

The particularly high impairment, an accounting measure, reveals that it thinks the Tekkie Town, Pep, Ackermans, Dunn’s, Refinery and Shoe City brands have lower book values than previously thought. This suggests that their future expected cash flow and profit have been adjusted lower.

The continued operations reported exclude Pep’s exit from Nigeria, which contributed less than 1% of total revenue in the 2022 financial year, earlier in 2023.

Total group revenue increased 7.7% to R87.4bn, boosted by the acquisition of Brazilian retail chain Avenida in February 2022, while its net number of stores grew by 87 to 5,917. Avenida now accounts for 4.3% of revenue, up from 2.4%, as it goes from strength to strength.

Its like-for-like sales, which exclude Avenida, however, grew a meagre 0.7% in its retail segment, while clothing and general merchandise grew 1.5%.

Furniture, appliances and electronics fell 2.1% and the building segment 0.8%. This shows consumers are buying less than before with the minor sales growth explained by price increases.

The like-for-like sales of Pep grew 4.5% while Ackermans fell 5.1%, with both coming in lower than internal selling price inflation of 7.3% for the year. This means that these flagship brands are selling fewer items than the year before, and that any growth is explained by higher prices rather than increased volumes.

Cash sales were up 5.6% and credit sales 35.6%. However, more than 90% of all sales were in cash.

In its interim results earlier in 2023, Pepkor, valued at about R65.8bn on the JSE, also noted that cash-strapped consumers were cutting back.

CEO Pieter Erasmus said at the time that customers were “telling us that they have to pay a bigger portion of their income towards food and transport”.

Ackermans is beginning to improve with a like-for-like sales drop of 1.1% in the second half versus 8.3% in the first after it said earlier in 2023 that its bad summer season, with incorrect fashion and pricing choices, led to increased discounting to sell stock, and higher inventory levels tying up working capital.

The share price was 3.76% higher at R17.95 at close of trade on the JSE.

Pepkor expects to publish its results on November 29.   









Agoa eligibility — navigating a complex framework of trade, politics and potential

by Lethabo Sithole

Kenyan workers prepare clothes for export at the United Aryan Export Processing Zone factory, operating under AGOA, in Ruaraka district of Nairobi, Kenya on October 26 2023. Picture: Reuters/Thomas Mukoya

The dynamic nature of eligibility requirements means a country’s status under Agoa can change over time

Navigating the complex framework of trade, politics, and potential that is the African Growth and Opportunity Act (Agoa) can be a daunting task.

As the 20th Agoa Forum convenes in Johannesburg to discuss the future of the trade act, it is clear that Agoa remains a thought-provoking subject at the intersection of policy, trade and development. Since its inception in 2000 the act has transformed the economic development of sub-Saharan African countries.

As of this month 35 African countries were active Agoa beneficiaries. The eligibility requirements, detailed in Section 104 of the Agoa legislation (Public Law 106/200), shape the fortunes of nations and the trajectory of their trade relations.

The Agoa eligibility criteria encompass a broad spectrum of considerations: 

  • Agoa demands that beneficiary countries maintain a market-based economy that safeguards private property rights, incorporates a rules-based trading system, and minimises government interference in economic matters. This involves measures such as eliminating price controls, subsidies and government ownership of economic assets.
  • A fundamental pillar of Agoa eligibility is the demonstration of respect for the rule of law, political pluralism and the protection of essential rights, including due process, fair trial and equal protection under the law.
  • Countries aspiring to benefit from Agoa must actively work towards eliminating barriers to US trade and investment. This encompasses providing national treatment, creating an environment conducive to domestic and foreign investment, protecting intellectual property rights and resolving bilateral trade and investment disputes.
  • Agoa mandates the implementation of systems designed to combat corruption and bribery, fostering an environment of transparency and integrity.
  • Eligible nations are expected to implement economic policies aimed at poverty reduction and improving access to healthcare and education.
  • Respect for human rights and core labour standards is a non-negotiable condition. This includes the right of association, the right to organise and bargain collectively, a prohibition on the use of forced or compulsory labour, minimum age requirements for child labour, and acceptable conditions of work in terms of minimum wages, working hours and occupational safety and health.
  • Beneficiary countries must not engage in activities that undermine US national security or foreign policy interests.

The dynamic nature of these eligibility requirements means a country’s status under Agoa can change over time. Periodic reviews ensure that nations continue to meet these criteria, and noncompliance may lead to withdrawal of Agoa benefits.

Qualifying for Agoa extends beyond meeting these country-specific criteria. It also involves ensuring that the products eligible for Agoa preferences adhere to the requirements of origin rules. These requirements are comprehensive and encompass a variety of products, from agricultural goods to textiles and apparel.

Careful documentation is essential to maintain compliance. While Agoa preferences include all products covered by the Generalised System of Preferences (GSP), there are also specific exclusions, such as automobiles and certain textiles and apparel.

Agoa’s annual determination of eligibility is a notable feature as it falls under the jurisdiction of the US president, highlighting the US’s ability to shape trade relationships with Agoa-eligible countries. However, the unpredictability of this process can be concerning for beneficiary nations as they lack a formal recourse to dispute settlement mechanisms regarding their Agoa status.

The fluctuating history of Agoa eligibility provides a captivating case study. Since its inception countries have been added and removed from the list due to political, economic and human rights considerations.

For instance, Zimbabwe has never been eligible. The recent decision by the Biden administration to remove Gabon, Niger, Uganda and the Central African Republic from Agoa is a testament to the trade tool’s power to influence foreign policy.

Agoa’s potential as a catalyst for economic development is disputed. While some see it as a pathway to progress, others believe it has fallen short. Utilisation of Agoa benefits is inconsistent among eligible countries, and many lack national strategies to maximise their potential, resulting in the programme being underutilised.

In 2021 a US government study revealed that over 80% of nonpetroleum exports under Agoa came from just five countries. The apparel industry has thrived under Agoa, but other sectors have not performed as well. Despite reaching its peak in 2008, US imports from Agoa beneficiaries only accounted for 1% of all imports in 2021.

To address the underutilisation of Agoa benefits in eligible countries a specialised and nuanced strategy is required. This should start with targeted awareness campaigns and the dissemination of detailed information and educational resources to governments, businesses and stakeholders. These campaigns should emphasise Agoa’s opportunities and compliance requirements to ensure maximum utilisation of the programme.

Advanced technical assistance should be provided to help build capacity and ensure compliance with trade regulations. Advocacy should also support policy and regulatory reforms that align with Agoa’s provisions. Notable progress has been made in this regard.

VentureLift Africa’s partnership with the US government’s Prosper Africa initiative is set to boost two-way trade and investment between African countries and the US. The primary objective is to implement the Agoa advisory training objectives of the continental services — trade preferences support programme.

This initiative aims to create a network of Agoa advisers who can support buyer-seller linkages and provide on-demand information on Agoa policies. These advisers cover all Agoa-eligible countries and the US.

Moreover, strategic public-private partnerships should be established, and networking facilitated between eligible countries. This should focus on advanced market research and product diversification to unlock the full export potential under Agoa.

Monitored and evaluated mechanisms should be employed, and financial access for trade and investment optimised. Advocacy efforts should be leveraged to influence the US’s Agoa-related policies. Long-term economic growth strategies should be developed and executed while encouraging regional integration for a sustainable impact.

Collaboration with specialised NGOs and international institutions is essential to augment the effectiveness of these bespoke strategies. A holistic and expert-driven approach is paramount to maximise Agoa’s advantages in eligible nations.

Efforts to bolster the effectiveness of Agoa have been aimed at expanding its scope to encompass emerging industries such as technology and digital services. While Agoa remains an essential tool for driving economic development and trade, its effectiveness is contingent on the adaptability of African nations and the US to respond to changing global conditions and strike a balance between political considerations and economic opportunities.  

• Sithole is managing partner at Amila Africa, a legal practitioner and consultant in international business, trade & investment law.








Mki Miyuki zoku Elevates Its Classics for FW23

With the collection featuring a new technically-focused balaclava, padded gilet, oversized tees, and more.

Leeds-based label Mki Miyuki Zoku has just presented its all-new FallWinter 2023 collection, packing the capsule with a slew of heavyweight designs that allow for minimalistic styling and easy mix-and-matching. 

MKI has been supplying its followers with a melange of seasonally-appropriate garments for some time now. From clean-cut tailoring to lightweight and heavy-set designs crafted to withstand the unpredictable nature of the British weather, the independent imprint has never been shy of experimentation. 

This experimental ethos has been encapsulated in MKI’s latest collection, with the drop standing as the label’s broadest collection to date. “Our Fall/Winter 2023 collection is a culmination of months of product development and numerous sampling attempts,” MKI MIYUKI ZOKU founder, Vik Tailor said. “We see upgraded versions of past silhouettes whilst mixing in brand-new textures and fabrics that sit perfectly on the cusp of contemporary streetwear.”

Key examples of this come in the form of the reworked technical Bubble Down Jackets, while new prints and Sherpa Fleece are used to elevate styles more than ever. Other introductions for MKI are a new Superweight Jersey — which is crafted at 800 GSM — along with a new technically-focused balaclava, padded gilet, oversized tees, and more.

You can take a closer look at the new collection from MKI MIYUKI ZOKU above and it’s available to shop via the brand’s official website now.




Rex True – AFS, integrated report and AGM

The audited annual financial statements for the year ended 30 June 2023 were published and are available on the JSE’s website at senspdf.jse.co.za/documents/2023/jse/isse/RTO/AFS2023.pdf and on Rex Trueform’s website at rextrueform.com/wp-content/uploads/2023/11/REX-TRUEFORM-2023-AFS.pdf. The AFS contain changes to the reviewed condensed consolidated financial statements for the year ended 30 June 2023 which were released on SENS on 11 October 2023.

The integrated annual report and the notice of annual general meeting are available on the Company’s website at rextrueform.com/wp-content/uploads/2023/11/REX-TRUEFORM-2023-IAR.pdf. The AGM will be held on Monday, 11 December 2023 at 10:00 am by way of electronic participation.




Pepkor – trading update and trading statement

Group revenue for the year ended 30 September 2023 (“FY23”) increased by 7.7% to R87.4 billion. The Avenida business in Brazil (which was acquired in February 2022) increased its contribution to group revenue to 4.3% in FY23 from 2.4% in the prior year – in-line with prior guidance.

Trading statement

Statutory results, FY23 expected range (cents); FY23 expected change (%) and FY22 actual (cents)

HEPS – including discontinued operations: 139.3 to 155.6; (4.3%) to (14.3%); 162.6

HEPS – continuing operations: 138.3 to 154.6; (5.2%) to (15.2%); 163.1

EPS – including discontinued operations: (24.8) to (41.4); (115.0%) to (125.0%); 165.5

EPS – continuing operations: (24.5) to (41.1); (114.7%) to (124.7%); 166.6

Dividend consideration

Based on the group’s credible operating performance and strong cash generation during the year, in addition to its healthy financial position, the board has resolved that the FY23 impairment will be disregarded in the consideration and determination of the FY23 dividend. The impairment will therefore not negatively impact any dividend declared for FY23.

Results announcement and webcast

Pepkor’s results for the year ended 30 September 2023 will be published on SENS on Wednesday, 29 November 2023.

A results presentation will be broadcast at 11:00am (SAST) on Wednesday, 29 November 2023. The webcast registration link will be made available prior to publication of the results on the Pepkor website: www.pepkor.co.za.






Until around the beginning of the 20th century, Chinese culture regarded small feet as beautiful, and it was a common practice to bind women’s feet from an early age to keep their feet small.   This practice was limited to the wealthy, however, as the feet of women who underwent this procedure were so deformed that they had difficulty walking.





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