Newsletter 20 of 2019

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           Newsletter No. 20                                                     31 May 2019

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TFG’s investment in online offerings pays off

By Larry claasen

Online turnover grew 57.2% in the year and now accounts for 8.8% of group sales, with 23 brands of its 29 now available online.

Clothing group TFG, whose brands include Foschini, American Swiss, and Markham, went against the prevailing retail trend by producing strong results in a difficult economy.

The group pushed up turnover 19.6% to R34,1bn and increased net profit from R2.4bn to R2.63bn for the year to end-March.

Although the biggest driver of its turnover growth was the first time inclusion of its UK and Australian acquisitions, its local operations managed to increase turnover from R20.9bn to R22.6bn.

TFG CEO Anthony Thunström said its local operations, received a boost from its factories now having a link to its IT systems, which monitored store sales, enabling it to respond quicker to trending fashion.

Previously, it would take six to nine months for orders to arrive from the Far East, but with the connectivity with its own factories, it could have trending products in its stores in two weeks.

Thunström said its investment in these systems had seen it increase the number of units it produced from 5.8-million to 8.9-million, of which 60.5% were for its quick response manufacturing.

Although the group now sold more goods, by having the capacity to react to fashion trends and not having to wait months to see if a product would sell, it also managed to decrease the markdowns on products that were not selling.

Thunström said having proportionally less excess stock resulted in the gross margins for its South African operations rising from 47.8% to 48.2%. “This might seem like a small increase, but given the volumes involved, the impact is huge.”

The performance of its local operations, along with the inclusion of its UK and Australian businesses, saw net profit surge from R1.89bn to R3.59bn. Group clothing turnover grew 23.7%, homeware and furniture increased by 8.4% and jewellery was up 5%.

Despite the steep rise in earnings, Thunström did not foresee an improvement in any of the markets it operated in. “We expect trading conditions to remain subdued across our three business segments with macro factors creating uncertainty both in SA and the UK.”

He said SA was particularly difficult, as an already high unemployment rate had increased and those who were still employed had to put up with fixed costs such as electricity and municipal rates rising faster than their salaries. “The last 12 months have been incredibly difficult. We have fewer people with money to spend, and they are not spending it.”

The UK is also going through difficulty as a result of the economic uncertainty created by Brexit. The Australian retail sector was also expected to go through a difficult year, according to Deloitte Access Economics’ latest quarterly. It expected retail turnover growth to fall from 2.2% in calendar 2018 to 1.6% growth in 2019.

TFG declared a final dividend of 450c per share, an increase of 7.1%.  Retail News

Nigerian garment manufacturers need funding: NEPC CEO

Though Nigerian garment markets are saturated with Asian items, domestic manufacturers—now trained, informed and having embraced value chain production systems—only need encouragement and funds as mass production needs capital and many are still at the workshop level struggling to meet delivery, said a top Nigerian Export  Promotion Council (NEPC) official.

If domestic manufacturers are well funded for expansion into large factories, backed up with firm-level technical training and government policy support for solely made in Nigeria garments, they can meet domestic needs as it will be more profitable, NEPC chief executive officer Olusegun Awolowo told the information portal of the US African Growth and Opportunity Act (AGOA).

NEPC set up the Human Capital Development Centre (HCDC) in Lagos in 2006 with modern industrial machines and engaged both local and international garment experts to train workers for mass production of garments for export to the United States under AGOA. Over 850 people have been trained at the HCDC to date, he said.

In addition to the above, the NEPC is currently providing technical support for export-ready garment companies by bringing into Nigeria and paying for the services of international garment experts from Sri Lanka and Ghana. The technical support started with the Calabar Garment Factory in Cross Rivers State where firm-level training was conducted for over 600 factory hands in December 2018, he added.  F2F

World Bank offers Sh1.2b to boost Kenya’s cotton sector

Kenya’s Kisumu National Polytechnic has received Sh1.2 billion funding from the World Bank to create centres of excellence for value addition in the cotton industry in the Nyanza region. The centres will be built across the region to offer skills and competencies to support the sector’s growth and sustainability. The project is expected to start next month.

The first centre will start at Nyakongo Technical Training in Rarieda sub-county, according to Kenyan media reports.

The various centres of excellence will each focus on different levels of value addition chain, from production of high quality seeds to fashion industry, said principal secretary in the state department for vocational and technical training Kevit Desai.

SACTWU congratulates the new Cabinet

SACTWU congratulates the new Cabinet The COSATU-affiliated Southern African Clothing and Textile Workers’ Union (SACTWU) welcomes the new Cabinet. We regard it as a monumental step forward, to help grow our country together.

We especially appreciate the appointment of Minister Ebrahim Patel as Trade & Industry Minister. It bodes well for the future of the clothing, textile, leather and footwear sectors, and for the fast-tracked development of the manufacturing industry in general.  We know Minister Ebrahim Patel as a hard worker, and firmly committed to the well-being of our nation, in particular workers and the poor in general.

We are firmly of the view that the growth and development of our manufacturing industry remains crucial for South Africa’s future overall economic well-being. We cannot be a country of raw material exporters and importers of finished goods, if we are to decisively address the triple crises of unemployment, inequality and poverty. The industrialisation and beneficiation of our economy is key.

We wish all the new Ministers and their Deputies well for their new period of office.

Issued By Andre Kriel SACTWU General Secretary.  For further comment, please contact SACTWU’s National Industrial Policy Officer, Etienne Vlok, on office number 021 4474570 or cell number 082 448 0506.

Did you know……..

The handbag was first designed and used to help women attract a husband. They were invented in the 19th century, and women would personally embroider them with colourful and intricate patterns to show off to the men.

Christian Louboutin manufactured a limited edition for brides. They had baby blue soles to give the bride “something blue,” but the company ceased production after copyright issues

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