6 of 2021

                                                                                                          

                                                              Newsletter No. 06 / 26 February 2021                          

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Textiles rebate could lead to more decent jobs and grow local sector

By Simon Eppel: A Clothing & Textile Workers Union research director

Surely even determined critics must be able to agree that the rebate is better than the zero-sum game of a decades-long deadlock

The government recently published an innovative, landmark and developmental rebate on imported textiles. The outcome of intensive though collaborative negotiations between government, labour, retailers, clothing manufacturers and textile manufacturers, it is helping to break an acrimonious, decades-long deadlock in the value chain.

The rebate offers to unlock growth in the downstream value chain (clothing manufacturing) while simultaneously — and counter-intuitively for a rebate on upstream inputs — supporting and growing the upstream value chain (textile manufacturing). The keystone in its architecture is that the rebate is a conditional reward for local procurement.

The well-worn value chain debate over decades has been as follows: downstream producers and retailers wanted to improve their fortunes and reduce their costs by removing duties on textiles that are not produced in the country. But upstream textile producers correctly argued that differentiating between the duties of locally available and non-available textiles in the tariff book would deindustrialise the domestic textile manufacturing industry and kill jobs: huge tariff loopholes would be created for fraudsters to exploit to illegally import all forms of textile products — not only those that are not locally made.

There has been merit to both positions. But no progress could be made while the matter remained an apparent and vexing trade-off between sectors and jobs. That is until our value chain came together through the Retail, Clothing, Textile, Footwear & Leather (R-CTFL) Masterplan, which provided social partners with a platform to negotiate and leverage a broader range of tools and commitments to offset risks from such a rebate.

Masterplans are based on social dialogue. Their foundational belief is that collaboration between government, business and labour in industries can unlock growth and usher in a new dawn for SA’s industrialisation, employment, inclusivity and decent work. Their method is a process of getting social partners to agree on common visions and mutual interests, and then to negotiate, explore, and find consensus on ways to achieve those interests, and finally to play a more central role in proactively shaping and implementing the plans.

Within the R-CTFL Masterplan social partners have coalesced around the fact that we share a collective task to achieve more inclusive and jobs-rich growth on the back of increased localisation, competitiveness and decent work. This does not mean everything is always “kumbaya”. Disagreements and distance still exist on issues. But our futures are intertwined and we must try to find solutions where we can. It is an incremental process but the new rebate shows it has definitely started.

On the ground we are hearing praise for the masterplan among retailers and manufacturers, and excitement for the boldness of this rebate. But a few recent detractors in the media have voiced criticisms. They may not understand the rebate and the industry properly or are grinding ideological axes. Or they may simply be trying to create alarm for self-serving purposes to benefit off the supposed impending crisis they are marketing. One doomsday-crier in the media, Donald McKay, laments the rebate as “the most complex piece of trade legislation in the country” and then conveniently offers his help to potential customers to deal with it (“The tangled warp and weft of the textile industry”, February 16).

Despite complaints suggesting the rebate covers a complicated and vast array of fabrics, it is actually not applicable to all fabrics used to make all clothing. It is specifically and deliberately intended for woven fabrics used to make woven articles of clothing.

There are few local textile factories left in SA that can produce retail-relevant woven fabrics, and those mills can only supply a small slice of the very large volumes and variations of total demand. To protect those mills and their jobs and grow their capacity and number over time, the rebate proposes that sufficient supply from those local mills should be procured through offtakes following which industry can be rewarded with cheaper imports of such fabrics. Over time, changes will be made to the rebate, which will incentivise further local textile production and sourcing, supported by investment in the sector and competitiveness enhancement.

Other false concerns have been raised that the rebate prevents exports and somehow prejudices SMMEs. But exporters still have other options, including using other existing textile rebates specifically intended for exports. In addition, the overwhelming majority of members of manufacturers that have signed onto the masterplan and will benefit from this rebate are SMMEs.

Finally, some media critics have bemoaned that the rebate is linked to labour compliance and bargaining councils. In fact textile rebates have long been linked to labour compliance. For good reason. Rebates are concessions offered by the state to private companies and the state is allowed to place expectations on voluntary applicants, including that they meet particular standards.

Why should companies that shirk labour compliance and treat workers illegally be allowed to benefit from state dispensations? Why would we want our state to aid and abet entities that defy the rule of law?

Surely even determined critics must be able to agree that the rebate is better than the zero-sum game of a decades-long deadlock. This scheme may not be a blanket reduction or rebate on textile duties. But textbook solutions informed by econ 101 neoliberalism have shuttered factories and shattered workers’ lives and often do not solve real-world complex problems.

Instead, our social partners have assessed the competing needs of the value chain and found an innovative and impasse-breaking common ground that is appropriate to the realities faced by the industry. It opens substantial new ground and we think offers the chance to increase competitiveness, repatriate production to SA, create more local decent garment manufacturing jobs and eventually stabilise and grow the local textile sector.

The R-CTFL social partners should be congratulated for their boldness. We will work together to implement the rebate, and if challenges emerge we will collectively try to solve them in the spirit of the R-CTFL Masterplan.  Business Day

The tangled warp and weft of the textile industry

By Donald MacKay – a former associate director of the Deloitte SA tax division, is founder and director at XA International Trade Advisors.

Rebates, tariffs, markets, permits – the list of hoops required to be jumped through is long, with criminal charges as a possible coda.

The more I read about the department of trade, industry and competition’s new textile import rebate regime the more alarmed I become. On the face of it, the rebate works like any other rebate. You can import goods that attract duty and not pay the duty if you use them to manufacture some qualifying item.

So far, so good, except the list of tariff codes eligible for the rebate covers the entire section XI of the Customs & Excise Tariff Book (textile and textile items). The tariff book has 98 chapters, broken up into 22 sections. Section XI covers chapters 50 to 63. These 13 chapters contain 1,010 tariff codes, of which 825 attract a duty of more than zero. These 825 tariff codes are the ones that concern us. Their duties range from 7.5% to 45%, so the value of the rebate can prove to be rather significant.

If you import something under these tariff codes then manufacture something classified in chapters 61 and 62 (articles of apparel and clothing accessories), you are over Hurdle One. Unfortunately, there is a long series of hurdles still to cross to actually see any benefit.

Hurdle Two: The market you sell into

You can only sell items made with the imported raw materials if the International Trade Administration Commission (Itac), or its equivalent in the other Southern African Customs Union (Sacu) countries, are satisfied you will only supply to retailers that will sell the goods in the country where they are manufactured. There are 274 tariff codes in these two chapters, of which 264 attract a duty.

Unless you buy all your raw materials locally, or you pay the duties, you will not be allowed to export. In 2019, we exported R5.9bn worth of product through these chapters. We also imported R4.8bn from the other Sacu countries. Given that this rebate only applies to raw materials imported into Sacu, an interesting opportunity is presented to countries such as Mauritius and Madagascar, which supplied R1.9bn and R1.3bn worth of apparel into SA in the same period, respectively, and also enter the Sacu region duty-free.

Let’s pause a moment and consider this. If you import the raw materials into Sacu and you benefit from the rebate, you can only sell the finished product in the country you manufactured in. You cannot make the item in Lesotho and bring it into SA. However, you can manufacture the whole garment in Mauritius (in fact any Southern African Development Community country outside Sacu) from Chinese raw materials and export into the Sacu region duty-free.

The Itac report into this investigation says these export restrictions are “to deepen the value chain in Sacu”, which is astonishing given that the rebate does exactly the opposite and in fact breaks the value chain. But the insanity doesn’t end here. Before the rebate permit will be issued, the manufacturer must produce orders from retailers in the country of manufacture.

But not just any retailer will do. You are also only allowed to sell to retailers “that have made local procurement commitments in terms of the retail, clothing, textiles, footwear and leather (R-CTFL) master plan and have signed the master plan or do in future and that have concluded the necessary off-take agreements”.

Hurdle Three: Reciprocal off-take agreements

If you want to access the rebate you not only need to also be purchasing from the local suppliers by way of an off-take agreement; you may not reduce the value and volume you buy from the local textile mills if you wish to hang on to your rebate. In other words, any imports can only be in addition to what can be supplied by the local mills.

Given that you are making clothing from the textiles you purchase, it’s not clear what happens if you want a particular design that is not available locally. Do you need to just keep buying volumes of other designs to ensure you don’t reduce your off-take? Do you just not do the new design (don’t worry though, it turns out you only need to worry about SA fashion preferences, because you can’t export if you use the rebate).

Never fear. In return for the off-take agreement, the textile mills are not allowed to increase their prices beyond inflation. Within two weeks of the implementation of the rebate, producers of the applicable textiles have to submit off-take claims to the off-take resolution team (ORT — not to be confused with the airport, where very little is also happening, except for the washing of SAA planes that may never fly again). Two weeks after this, off-take agreements have to be concluded between retailers and the textile mills.

If any disputes arise in resolving these agreements this is referred to the ORT, which is made up “a representative of each of the National Clothing Retailers Foundation of SA, the Southern African Clothing and Textile Workers Union, and the department of trade, industry and competition, and from the woven textile sector.”

The off-take agreements must be signed off by the respective manufacturers of clothing. All these commitments are then sent to the ORT, which collates all this information so it now knows how much each retailer is committing to each mill and how much, in total, each mill has to supply. Itac will only begin issuing permits when 90% of the off-take requests have been resolved.

If there are no continued orders for fabrics that are subject to the off-take agreement, the retailer and clothing manufacturer must “explore appropriate options in an attempt to meet or exceed commitments contained in the relevant off-take agreement”. I kid you not.

Hurdle Four: No predefined period for the rebates

To actually get the rebate you first need to register with Sars as a rebate user. Once that is done you apply to Itac for your rebate permit and Itac has at least 14 days to assess your application. If it decides to issue you with a permit you will be told what period the permit is valid for, which could be shorter than the period you asked for at the discretion of Itac. In other words, if you need a permit to use the rebate for six months and Itac decides you really only need three months, your permit will expire after three months.

Hurdle Five: The rebate permits cannot be transferred

The rebate permit can only be used by the applicant. If you are nearing the end of the rebate period on your permit and you realise you won’t use all the volume allocated to you, you cannot trade this permit to anyone else. It will simply expire.

Hurdle Six: Extending the permit

Note hurdle 4. If you are getting close to the end of the period of your permit and you realise you won’t make the deadline, but you think you can still use the permit later on, you can approach Itac, but you must do this before the permit expires. You also have to motivate to Itac why you need the extension, and it’s entirely up to the commission if you get it or not.

Hurdle Seven: The bargaining council

Importers of fabric under this rebate must be “clothing manufacturers with compliance certificates from the National Bargaining Council for the Clothing Manufacturing Industry”. This immediately removes many of the smaller producers.

If you are a textile mill importing raw material that you will add value to — such permissible value-adding options being described in excruciating detail — you, too, must belong to the bargaining council and can only sell your fabric to clothing manufacturers that belong to the bargaining council and have signed up to the master plan.

Hurdle Eight: Ease up on the outsourcing

“Clothing manufacturers would be allowed to outsource a maximum of 50% of their production.” Design houses can outsource 100% of their production. Design houses and manufacturers are then defined in detail. Outsourcing can only happen if a number of complicated conditions are met.

Hurdle Nine: All the other stuff

  1. You have to meet regularly with the department’s project management office, not be confused with the ORT, where you will be told how to increase your consumption of yarn and fabric.
  2. You have to be successful. If your economic performance doesn’t improve you can’t keep getting the rebate.
  3. You have to create jobs (easily done when all the experienced people lose their jobs in Lesotho and arrive in SA).
  4. The retailer’s purchase order is described in some detail and if it doesn’t contain all the requisite information it is not acceptable.
  5. An undertaking must be made that if you get the rebate you will still keep buying at the committed volumes from local mills.
  6. Your statutory auditors have to confirm your improvement in performance, jobs created, extra production and changes in cost because of the rebate. Thank god they don’t ask for export improvement, because that is now not allowed.

Hurdle 10: You can face criminal charges if you don’t comply

“If it is established that non-compliance took place, appropriate steps will be taken. These steps will be taken in terms of the International Trade Administration Act and the Customs and Excise Act and can include criminal charges, withdrawal of the permits or permits concerned.” Business Day

TFG presses for cut in yarn import duties to advance SA manufacturing

Retail group TFG has urged the South African government to speed up a planned removal of import duties on yarns, which are cotton threads used to make fabric. The Foschini owner said this change is essential to enable larger purchases of locally-made fabrics.

In addition, the company said that further investment to support the upgrading of domestic fabric mills will ensure that they can manufacture rapidly evolving fashion fabrics. “These interventions, combined with the recently announced duty rebate, will assist in further boosting Department of Trade, Industry and Competition’s bold interventions in South Africa’s retail-clothing value chain,” TFG stated in a media release.

The company celebrated the advancement of local manufacturing development following Minister Ebrahim Patel and the DTIC’s commitment to the Retail-Clothing, Textiles, Footwear and Leather (R-CTFL) Masterplan. This progress includes DTIC’s continued commitment to reinvigorating the entire value chain.

TFG said that the recently announced introduction of duty rebates on woven fabrics is a clear indication of DTIC’s dedication to furthering the localisation of manufacturing in South Africa, and that the initiative will undoubtedly improve the competitiveness of the local clothing industry and bring significant change to the domestic mills that are still in operation.

TFG CEO, Anthony Thunström, commented, “In our ongoing support of DTIC’s retail-CTFL Masterplan and the growth of local manufacturing, TFG continues to pursue initiatives and collaborations that drive the realisation of the Masterplan’s objectives that will ultimately drive larger-scale manufacturing employment in South Africa.

“We are directly committed to this critical task through our manufacturing facilities, which have been upgraded and expanded over the last few years and which are successfully increasing their sales into our various retail channels”, said TFG CEO, Anthony Thunström.

Exploring new manufacturing business models
To further support the dynamic development of the manufacturing sector in South Africa, TFG recently agreed to sponsor a Future Manufacturing post at the Toyota Wessels Institute for Manufacturing Studies (TWIMS) in Durban. The funding intends to enable the exploration of new business models in the manufacturing sector, especially those relating to rapidly emerging digital technologies that are likely to re-shape the R-CTFL value chain in the next few years.

“South African manufacturing capability must advance quickly over the next decade. TFG is eager to support initiatives focused on developing world-class management capabilities needed to drive South Africa’s localisation strategy,” added Thunström.
Black Production Management Development Academy

Although the number of people employed in their supply chain is expected to grow substantially, there are almost no black production managers, said TFG. To address this gap and as part of TFG’s transformation journey, February also marks the launch of TFG Manufacturing’s Black Production Management Development Academy and its innovative two-year Quick Response-focused curriculum.

This programme is likely to be a critical enabler of TFG’s local expansion strategy. The programme adopts an immersive and blended approach to management development with a strong emphasis on practical application and real-life relevance that is expected to more than adequately equip and skill South Africa’s black production managers of the future.

“TFG remains a steadfast partner to the DTIC and the South African R-CTFL industry in our joint mission to grow local manufacturing. We recognise the major constructive role retailers like ourselves can play in supporting the development of South Africa, and we are keenly aware of the competitive advantages we can forge for ourselves through the advancement of domestic manufacturing capabilities,” concluded Thunström.  Bizcommunity

HomeChoice – board changes

Shareholders are advised of the following changes to the Company’s board and to its committees:

The board announced that Marlisa Harris has been appointed, with effect from 23 February 2021, as an independent non-executive director of the Company. She will also assume the responsibility as the chairperson of the audit and risk, and remuneration committees, also with effect from 23 February 2021.

Accordingly, Pierre Joubert, lead independent director of the Company, and Eduardo Gutierrez- Garcia, have relinquished their roles as chairman of the audit and risk and remuneration committees respectively. The board extends its gratitude to Pierre and Eduardo for their chairmanship of the respective committees.

Pepkor – results of resolutions passed

Shareholders of the Company (“Shareholders”) are referred to the announcement published by the Company on SENS on 18 January 2021 (“Prior Announcement”) regarding the distribution of a circular to Shareholders, pursuant to which written resolutions were submitted for consideration by the Shareholders in terms of section 60 of the Companies Act , inter alia, to approve the issue of 70 000 000 new Pepkor shares to certain indirectly wholly-owned subsidiaries of Steinhoff International Holdings N.V. in terms of section 41(1) of the Companies Act. Terms written with a capital letter in this announcement bear the meaning ascribed to them in the Prior Announcement, unless otherwise defined.

The 70 000 000 new Pepkor Consideration Shares represent consideration for the acquisition of properties currently leased by Pepkor, which are predominantly used by Pepkor’s operating entities as distribution centres, with one property being used as a corporate head office and one property being used as a call centre.

Shareholders are advised that the resolutions have been duly adopted in terms of section 60(2) of the Companies Act.

The Transaction remains subject to the fulfilment of a number of other conditions precedent and updates will be provided as required.

Truworths interim results December 2020

Revenue for the interim period was 10.3% less at R9.9 billion (2019: R11.0 billion), gross profit decreased by 10.8% to R4.8 billion (2019: R5.4 billion) and trading profit lowered by 12% to R1.5 billion (2019: R1.8 billion). Profit attributable to equity holders declined to R1.3 billion (2019: R1.5 billion). In addition, headline earnings per share went down 7% to 339.3 cents per share (2019: 364.9 cents per share).

Interim dividend
The directors of the company have resolved to declare a gross cash dividend from retained earnings in respect of the 26-week period ended 27 December 2020 in the amount of 232 South African cents (2019: 249 South African cents) per ordinary share to shareholders reflected in the company’s register on the record date, being Friday, 12 March 2021.

Company outlook
South Africa: Truworths
The second wave of the COVID-19 pandemic and the associated restrictions under the adjusted level 3 lockdown continues to adversely impact consumer spending and limit retail foot traffic to ensure their safety and limit possible exposure to infection. While it is critical for government to accelerate the COVID-19 vaccination programme to protect the South African population and enable the country to start the protracted process of rebuilding the economy, the efficacy of current vaccines against the mutated strain of the virus remains uncertain.

Despite the challenges in the macro environment, Truworths remains a highly stable and long-term sustainable business with robust cash flows and a strong balance sheet. Medium-term growth prospects will be supported by the significant improvement in the quality of the debtors book since most of the adverse impact of the hard lockdown in April 2020 has rolled through the portfolio, together with the quality of new accounts and growth in shoppable accounts. The launch of several new concepts to expand the Group’s offering, including a more value-focused chain to gain entry into the lower end of the South African fashion market, an increased focus on excellent value and in-demand product (increasing range of promotional items), as well as the strong growth in e-commerce will further support Truworths’ mediumterm performance.

Truworths’ retail sales for the first six weeks of the second half of the 2021 reporting period decreased by 6.9% compared to the first six weeks of the prior corresponding period, mainly due to the subdued consumer spending environment in the wake of the second wave of infections and lockdown restrictions. If there are no further hard lockdowns in South Africa for the remainder of the financial year, management expects sales to increase in the second half of the current financial year relative to the second half of the prior financial year due to the impact of the hard lockdown in that period. Trading space is expected to remain unchanged for the 2021 financial year.

United Kingdom: Office
A third national lockdown imposed by the UK Government from 5 January 2021 is currently expected to continue until early March 2021, and will severely impact Office’s sales performance for the third quarter of the 2021 financial year. Sales through Office’s online platform are expected to partially compensate for the loss of in-store sales during this time when all non-essential retail activity is suspended. The UK retail environment is likely to remain challenging for the remainder of the financial year. The Office turnaround plan is ongoing and progress has been made in the following key areas: stock management through the trading (buying and planning) alignment initiative; the closure or renegotiation of lease terms of several loss-making stores; the completion of the head office redundancy programme; and general cost and capital expenditure control. The roll-out of the UK’s COVID-19 vaccine programme, with an estimated 22% of the population having already received their first vaccine shot, will hopefully reduce the risk of further lockdown restrictions and support the reopening of the retail sector.

Office’s retail sales for the first six weeks of the second half of the 2021 reporting period decreased by 37.6% in Sterling compared to the first six weeks of the prior corresponding period. This is due to the lockdown restrictions and temporary store closures. Trading space is planned to decrease by approximately 22% for the 2021 financial year as Office continues to close marginal and unprofitable stores.

Truworths – appointment of acting CFO

Truworths shareholders (Shareholders) are referred to the announcement published on SENS on 30 November 2020 advising Shareholders of the resignation of Mr David Pfaff, as the Group’s Chief Financial Officer (CFO), with effect from 28 February 2021 and are hereby advised that the board of directors of the company (Board) has appointed Mr Hermanus Gideon (Reon) Smit, the current Truworths Limited Divisional Director: Finance, as the acting CFO with effect from 1 March 2021 until a new CFO is permanently appointed.

The audit committee of the company has satisfied itself as to the appropriateness of the expertise and experience of Mr Smit and is in full support of his appointment as acting CFO until a new CFO is permanently appointed. The JSE has granted a dispensation from the provisions of paragraph 3.84(f) of the JSE Listings Requirements for Mr Smit to fulfil the role of CFO on an acting basis until 31 August 2021. The Board will continue with the process of recruiting a suitable permanent CFO and Shareholders will be advised as soon as such appointment has been finalised.

Massmart – operational update & trading statement

Further to the sales update for the 52 weeks ended 27 December 2020 released on SENS on 21 January 2021, the Group hereby provides an update on trading for the same period.

As previously announced, the Group’s full year sales of R86.5 billion was 7.7% lower than 2019, with comparable stores sales being 7.5% lower.

Fourth quarter sales, which contracted by 4.1% over the previous year, represented an improvement on the H2 sales trajectory (total H2 2020 sales decreased by 5.9% over the previous year). Fourth quarter sales were impacted by softer sales over the Black Friday period, in addition to lower foot traffic, especially in regional malls. The Company’s extension of Black Friday promotions throughout the month of November mitigated some of this impact, with total sales for November being 5.0% lower than the previous year. We are encouraged by strong sales growth relating to Home Improvement, which grew by 8.1% over the course of H2 2020, showing strong growth in the 4th quarter.

Massmart estimates the total sales lost for the full year due to Covid-19 restrictions, including extended restrictions on normal trading of liquor to be at least R6.0 billion when compared to 2019. Some of the impact of lost sales were offset by rent relief received from our landlords, and benefits received from Government through the Temporary Employment Relief Scheme (TERS) relief provided.

Ongoing focus on gross margin management saw our total margin percentage continue to improve, as was the case in H1 2020. Gross margins in the business have benefited from sales mix changes, especially in our Builders Warehouse business with increased contribution from retail sales, whilst we have seen improvement in everyday margins in all of our businesses through application of improved merchandising disciplines.

The Group continued to focus on expense management, especially in light of top-line pressures and in line with our turnaround plan. Similar to the H1 2020 expense performance, Massmart has been able to keep full-year expenses flat compared to last year.

The combination of the improvement in gross margin and strong expense management assisted to offset the impact of lost sales relating to Covid-19 restrictions. As a result, the Group estimates that trading profit will be between 3% and 8% better than last year’s trading profit of R1.1bn.

On a full year basis, the Group incurred total retrenchment costs of approximately R132 million. This related to the closure of Dion Wired, the previously announced closure of 11 Masscash stores, the reorganisation of the Game store-level operating model and the reorganisation of certain above- store level support functions into centralised Centres of Excellence.

As a result of changes in market conditions, the Group has recorded goodwill impairment losses relating to the Cambridge and Fruitspot businesses. In addition, the Group recorded an impairment loss relating to the Meat Production Facility. Certain store level assets have also been impaired. Consequently, total impairment losses of approximately R798 million have been incurred.

The Group’s ongoing focus on liquidity, and pro-active management of cash flow, resulted in net debt being some R200 million higher than last year, despite the significant impact of lost sales relating to Covid-19 restrictions. Average borrowing costs were better than last year, which resulted in total interests costs being around 3.4% lower than last year.

Consequently, and notwithstanding the impact of the total lost sales due to Covid-19 restrictions, shareholders are advised that Massmart expects, with reasonable certainty, the following financial results compared to the 52 week period ended 29 December 2019:

Expected 2020 & Reported 2019 & Expected % change
* Headline loss : (901.3) to (958.7) & (1,151.5) & 16.7 to 21.7
* HLPS (cents) : (416.2) to (442.6) & (529.0) & 16.3 to 21.3
* Net loss : (1,711.5) to (1,776.9) & (1,307.5) & (30.9) to (35.9)
* Basic LPS (cents) : (790.3) to (820.3) & (600.6) & (31.6) to (36.6)

Additional Portfolio Optimisation: Intention to divest an additional 14 Masscash stores
In January 2020, Massmart announced its intention to close Dion-Wired and 11 under-performing Masscash stores, pursuant to optimising the performance of our group store portfolio. This portfolio optimisation process is one of six work streams in the Massmart turnaround plan. (The other work streams being to; re-organise the group operating model, reset the group cost base, integrate the group supply chain, re-set Game and merge our wholesale assets).

We subsequently communicated that we had identified a potential buyer for 8 of the 11 aforementioned Masscash stores. On 16 February 2021, the Competition Tribunal approved the transaction covering those 8 stores with a condition linked to employment security. The potential sale of the remaining 3 stores is still being contemplated. Subsequent to the announcement of the aforementioned 11 Masscash stores, a decision was taken to divest the Qwa Qwa Masscash store. A suitable buyer was found for the store and the transaction will close shortly.

In a further development and following a more comprehensive strategic review, we have taken the decision to divest our interest in an additional 14 Masscash Cash and Carry stores. This decision is aligned to our previously referenced turnaround objective to optimise the group store portfolio and is enabled by the good progress that we have made toward consolidating our Makro and Masscash wholesale store base within the Massmart Wholesale Business Unit.

The following Masscash stores were impacted by this decision: Browns & Weirs Cash & Carry – Idutywa, Browns & Weirs Cash & Carry – King Williams Town, Browns & Weirs Cash & Carry – Lusikisiki, Browns & Weirs Cash & Carry – Mount Frere, Ficksburg Cash & Carry, Manguzi Cash & Carry, Nelspruit Cash & Carry, Philippi Cash & Carry, Piet Retief Liquors, Pretoria West Cash and Carry, Springs Cash & Carry, Thembani Wholesalers Pty Ltd, Vryburg Cash & Carry, and Jumbo Cash & Carry – Durban.

Did you know……..

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Fast fashion retailers save billions of dollars by locating their factories in emerging countries. The high cost of a large fashion industry in countries like India, Bangladesh, Pakistan, Cambodia and many more is the impact on the local environment and workers’ rights violations

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