Newsletter No 07 / 25 February 2022
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Surprisingly strong December retail sales build on November’s
By Chris Gilmour
Main contributor was retailers in textiles, clothing, footwear and leather goods with 19.2% growth
Stats SA released the December 2021 retail sales figures last week. These were surprisingly strong and followed strong November retail sales figures, which had been adjusted slightly downwards in this statistical release.
Overall retail sales growth year on year to December 2021 was 3.1%, which followed an almost as strong 2.7% year-on-year growth in November, which included the so-called Black Friday weekend.
For the 2021 year as a whole, retail sales grew 6.4%, which though robust, was not enough to wipe out the negative growth of 7.1% in 2020.
In rand terms, the total retail sales figure was R961.7bn, which was almost identical to 2018’s figure of R960.9bn but 1.1% below the 2019 (prepandemic) figure of R972.8bn.
All seven retail categories showed positive year-on-year growth rates over the year.
The main contributor was retailers in textiles, clothing, footwear and leather goods (CFTL), which turned in 19.2% growth and contributed three percentage points of the overall 6.4% growth.
Mindful that Stats SA’s categories do not align strictly with those of the JSE-listed retailers, one can nevertheless draw the conclusion that any JSE-listed CFTL retailer that exhibited growth of less than 19.2% for the year (in real, inflation-adjusted terms), probably lost market share.
Gains and losses
There is now enough data from Stats SA’s November and December retail sales figures to make educated guesses about various market share gains and losses, in combination with broad updates from the retailers themselves.
Woolworths’ clothing sales for the six months from July to December 2021 rose 4.2% against average sales growth from Stats SA’s figures of 8.8%. And the Stats SA figures are in real terms, after adjusting for inflation, so in nominal terms that 8.8% would equate to a figure of more than 10%. Against that type of CFTL background, it seems fair to assume that Woolworths’ clothing has lost market share.
Truworths also gave a 26-week trading update to end-December. Retail sales for Truworths Africa increased 1.4% to R7.4bn relative to the prior period’s R7.3bn. This group must have lost significant market share during the period, though in the credit space specifically, CEO Michael Mark is adamant that market share was maintained or even improved. Truworths has struggled for some time to grow its top line and it seems that 2021 was no exception.
TFG’s trading update in January was more illuminating than Woolworths’. It gave sales updates for the various component parts of the business for the three months to end-December as well as the first nine months of the current financial year.
TFG Africa’s retail turnover grew 17.3% during the third quarter. That figure incorporates the months of October, November and December and compares with Stats SA’s 10.4% average growth for the same period. Even adding in a bit of inflation leaves no doubt that TFG gained significant market share during the quarter. TFG was helped in its market share growth by the recent addition of Jet, which it bought from Edcon in 2020.
Likewise Mr Price gave a 13-week trading update for the third quarter of the financial year, during which retail turnover grew 19.2%. Admittedly much of this growth was due to recently acquired Power Fashion and Yuppie Chef, without which growth would have been 7.2%.
Mr Price management believes that it lost some market share temporarily in October and November due to pursuing more of a full-price strategy against a highly promotional background during those months. However, it says it recouped significant market share during a very strong December trading period.
So it seems that the strategy employed by Mr Price and TFG to buy market share by acquiring businesses at the depths of the pandemic has paid off. These two companies are also nicely positioned at the lower end of the social spectrum, which means that they should do better in languid economic conditions than more upmarket operations such as Woolworths and Truworths. BL
• Gilmour is an independent investment analyst with Salmour Research.
NYFW: A season for revival
“We could use a little antithesis of the sad slipper life”. Following designer Michael Kors’ words following the past two and a half years of isolation and (sometimes almost too) cosy fashion, this season’s New York Fashion Week was future oriented, positive, a celebration of life & craft, with the clear message that it is time for us to get back out there in style !
In the city that never sleeps, designers presented garments clearly meant to own the night just as well as you would own the day. Tailoring is omnipresent & experimented with and each silhouette seems to exude more power, sexiness and elegance than the previous one.
Moreover, the absence of some of NYFW’s titans of the industry made way for the public to focus on potential future household names such as Peter Do, therefore allowing creative directors to further build their brands’ DNA.
Finally, the great hight note of this season was the noticeable plus size silhouettes marking great steps in the right direction for body inclusivity in luxury fashion.
Style King: 10 times Riky Rick inspired us to dress better
Award-winning South African rapper and producer Riky Rick was a force to be reckoned with in the music and fashion industry.
Since his come up in 2014 when his hit single Nafukwa was released, Riky Rick was constantly trending because of his now lucrative music career, his unmatched street style and now and then the sweetest open letters he wrote to his wife Bianca Naidoo.
Riky Rick was a fashion designer and the founder and owner of record label Cotton Club Records which he had since expanded into a music festival, lifestyle and clothing brand, Cotton Fest.
The late multi-talented Hip-Hop artist collaborated with Puma as well as MaXhosa and Okapi on a capsule collection.
With a resumé like his, there is no need to question why Riky Rick become one of Mzansi’s favourite style icons. GQ South Africa
Truworths interim results December 2021
Revenue for the interim period went up 3.9% to R10.3 billion (R9.9 billion) whilst gross profit grew 6.6% to R5.1 billion (R4.8 billion). Operating profit jumped 32.5% to R2.5 billion (R1.9 billion). Profit attributable to equity holders was higher at R1.8 billion (R1.3 billion). Furthermore, headline earnings per share rose 32.2% to 448.6 cents per share (339.3).
The directors of the company have resolved to declare a gross cash dividend from retained earnings in respect of the 26-week period ended 26 December 2021 in the amount of 300 South African cents (2020: 232 South African cents) per ordinary share to shareholders reflected in the company’s register on the record date, being Friday, 11 March 2022.
South Africa: Truworths
The further lifting of restrictions as the country passed the peak of the Omicron-fuelled fourth wave of the COVID-19 pandemic has contributed to normalising of the economy. This is favourable for consumer sentiment and, ultimately, retail spending.
While COVID-19 uncertainty is expected to continue well into the future, the risk of further waves of infection will be mitigated by increasing vaccination levels and administering booster doses of the vaccine.
Although the economic outlook remains challenging, management expects growth to be supported by initiatives to increase its market share in categories where it is under-represented, the ongoing improvement in the health of the debtors book, the introduction of new credit products and payment options, new and expanded retail store concepts and brands, the continual expansion of the Group’s e-commerce offering and further technological innovation to support the customer shopping experience.
Truworths’ retail sales for the first seven weeks of the second half of the 2022 reporting period increased by 5% compared to the first seven weeks of the prior corresponding period.
Trading space is expected to remain unchanged for the 2022 financial year.
United Kingdom: Office
Office is expected to continue to benefit from its strategic positioning with the world’s leading footwear brands, and its strong and expanding online presence supported by its network of 94 stores.
Office’s retail sales for the first seven weeks of the second half of the 2022 reporting period increased by 41% in Sterling terms compared to the first seven weeks of the prior corresponding period, continuing the improving post-lockdown sales patterns reported for the first half.
Trading space is planned to reduce by approximately 11% for the 2022 financial year as Office continues to follow its strategy of exiting unprofitable stores as leases expire or lease breaks are agreed with landlords.
Agent required for apparel label
We are looking for an agent to help in scaling up our apparel and lifestyle label.
Resort by Danela Conti (now called Resort Africa) has been going as a clothing and décor label for 14 years, initially in our own branded store and subsequently as a wholesale collection sold into a few hotel boutiques, stand-alone boutiques and directly to customers.
Our short-term goal is to have a wide reach of upscale hotel and resort shops as our stockists in both South Africa and across the African Continent as well as to be stocked in lifestyle stand-alone stores.
We are looking for an enthusiastic agent who can connect with our ethos and the esthetic of “Resort Africa” to aptly represent the brand of kaftans, apparel and lifestyle goods.
50% of our product is manufacture din Cape Town and 50% is manufactured in India (but designed in Cape Town).
For more information, please email email@example.com
Or call or whats app: 073 201 2889
The most talked about Oscars dresses of all time
Ashley Judd, 1998
Years before Janet Jackson’s infamous wardrobe malfunction, Ashley made headlines after an up-to-there slit revealed a little too much for primetime television
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