Newsletter 6 of 2020

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Newsletter No. 6                                                                                                 28 February 2020

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SACTWU Responds on the Budget Speech

The COSATU-affiliated Southern African Clothing and Textile Workers’ Union (SACTWU) notes the Budget Speech by Minister of Finance, Tito Mboweni.

The Minister has indicated that procurement reforms will be undertaken to achieve value for money and maximise the quality and quantity of services, and that Cabinet has approved the publication of the Public Procurement Bill. SACTWU has been waiting for this Bill for several years and has been frustrated by its delay. Public procurement, particularly the procurement of locally made goods, is one of the State’s key tools to promote local industrialisation and job creation. Yet at this point we still see too much leakage where imported products flow into State supply chains despite these products being designated for localisation and local content. SACTWU wants to see much stricter mechanisms in place to ensure that procuring authorities fulfil their obligations towards localisation and grow upstream industries and jobs. The publication of this Bill finally gives us a chance to move this process along, fix problems within the procurement regime, and develop a sharper and more effective tool for the benefit of our economy.

also note the R18.5bn allocated for the re-imagined industrial strategy. Given the importance of industrialisation for jobs and a future sustainable economy, we would have hoped for a greater a much larger allocation.

Issued by:  Andre Kriel, General Secretary, SACTWU

For comment please contact Research Director Simon Eppel on 083 652 3559.

City of Cape Town reiterates support for local clothing and textile sector

The City of Cape Town says it is committed to supporting the local clothing and textile sector by providing grant funding to strategic business partners dedicated to the growth of the industry.

Cape Town’s clothing and textile industry is the second largest employer within the local manufacturing sector, employing 24,330 individuals. It contributed R4,4 billion to the metro’s exports in 2017.

Alderman James Vos, Mayoral Committee Member for Economic Opportunities and Asset Management, recently attended the Fashion Graduate Recruitment Showcase (FGRS) hosted by the Cape Town Fashion Council (CTFC). The programme is designed to create a platform for young up and coming talent in the Clothing and Textile industry.

“The showcase provides a platform to connect prospective employers with young fashion graduates. As part of the showcase, South Africa’s top graduates are curated by an expert industry panel, based on a set of criteria. The City supports this programme that is designed to create a platform for young up and coming talent in the industry. It has previously seen participating candidates being employed into entry-level positions,” said Vos.

In addition to the Cape Town Fashion Council, the City states that Cape Town’s clothing and textile industry is also well served by organisations such as the Cape Clothing and Textile Cluster and Clotex. The funding of these organisations goes towards programmes that cater for training, upskilling and cross-skilling, internships and placement as well as the sector promotion and development, among a host of other initiatives.

“We do this because the clothing and fashion design sector is a major employer and contributor to the Cape Town economy. The main aim is to eventually make Cape Town the go-to city for fashion and design on the continent and beyond because we have what it takes as a city to be the best in the world,” added Vos.  Bizcommunity

Woolies interim results December 2019

Revenue for the interim period increased 3.9% to R38.442 billion (2018: R37.016 billion), gross profit lowered 0.7% to R14.134 billion (2018: R14.227 billion), operating profit rose 10.2% to R3.279 billion (2018: R2.976 billion), profit attributable to shareholders of the parent decreased to R1.571 billion (2018: R1.892 billion), while headline earnings per share weakened by 17.7% to 164.9 cents per share (2018: 200.4 cents per share).

Dividend
Notice is hereby given that the board of directors has declared an interim gross cash dividend per ordinary share (‘dividend’) of 89.0 cents (71.2 cents net of dividend withholding tax) for the 26 weeks ended 29 December 2019, a 3.3% decrease on the prior period’s 92.0 cents per share. The dividend has been declared from reserves and therefore does not constitute a distribution of ‘contributed tax capital’ as defined in the Income Tax Act, 58 of 1962. A dividend withholding tax of 20% will be applicable to all shareholders who are not exempt.

Company outlook
In South Africa, consumers remain under pressure from a weak economy amidst continued power outages. FBH will focus on improving performance through better pricing and ranges, particularly in Womenswear. Food is expected to continue to trade ahead of the market. In Australia, consumer spending is likely to be muted in the short-term due to stagnant wage growth and the impact of the bushfires. The heightened levels of competition and promotional activity is expected to continue. David Jones is expected to benefit from the completion of the Elizabeth Street store refurbishment, with trade normalising from the fourth quarter and the Market Street rent ceasing from FY2021. Online is an increasingly important channel for the Group and we continue to invest in this growth driver. The Coronavirus is significantly impacting tourism, footfall and sales in Australia. A further impact on sourcing is also expected across the Group. The Group is currently actively considering ways to mitigate the risks associated with the Coronavirus. Any reference to future financial performance included in this statement has not been reviewed or reported on by the Group’s external auditors, and does not constitute an earnings forecast.

Truworths final results December 2019

Revenue for the year was 1.2% higher to R11.0 billion (R10.9 billion) whilst gross profit increased by 1.4% to R5.4 billion (R5.3 billion). Trading profit lowered by 3.2% to R1.75 billion (R1.81 billion). Profit attributable to equity holders decreased to R1.5 billion (R1.6 billion). In addition, headline earnings per share went up 0.5% to 364.9 cents per share (363.2 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 29 December 2019 in the amount of 249 South African cents (2018: 249 South African cents) per ordinary share to shareholders reflected in the company’s register on the record date, being Friday, 13 March 2020.

Company outlook
South Africa: Truworths
South Africa’s retail trading environment will remain constrained in the short to medium term due to the country’s low economic growth. In this environment Truworths will continue to focus on its proven merchandise strategies, exercising tight cost and margin control, ensuring the health of the account portfolio and maintaining a strong balance sheet. Truworths will look to leverage technological advancements, data analytics and artificial intelligence, further integrate its physical and online retail offerings, build on its fast fashion and quick response capabilities and continue to grow its account base in order to position the business optimally for future growth.

Truworths’ retail sales for the first seven weeks of the second half of the 2020 reporting period increased 11.9% compared to the first seven weeks of the prior corresponding period mainly as a result of the movement in the timing of the end-of-season sale. Trading space is planned to increase by approximately 1% for the 2020 financial period and is expected to remain unchanged for the 2021 financial period.

Pepkor – resignation of director.

The board of directors of the Company advised that Mr Mark Harris has resigned as an independent non-executive director of the Company with effect from 19 February 2020

Did you know……..

Almost all machines were invented for the cotton trade, but they could be and were adapted for use in the production of wool fabric.

Worsteds adapted more easily to the new technology than woolens did. The spinning frame was used to spin long-staple wool for worsteds.

Short-staple wool used in woolens was more fragile and much more difficult to spin by machine, although it, too, was being spun by jennies by the 1780s.

The same was true of mechanical weaving when it spread in the nineteenth century. Stronger threads made it easier to weave worsteds than woolens

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