Trade Tatler
“Buying the right computer and getting it to work properly is no more complicated than building a nuclear reactor from wristwatch parts in a darkened room using only your teeth.”
Dave Barry



THIS ISSUE:     11 Feb - 17 Feb

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SPAR  The Ghost of Christmases Past

SPAR’s turnover rose 9.2% to R8.8billions for the quarter ending December, which the consensus seems to be was a solid performance. Our Uncle Sidney, who knows a bit about this sort of thing, points out that trading space was up around 4% for the period, suggesting like store growth of 5%, a number which points to the general toughness of Things Out There at the Moment. On the cautious upside, volumes were up as food inflation declined, and the smart money says both inflation and consumer spending should be up as the year unfolds, with full-year sales a little more on the bullish side.
Comment: A difficult Christmas then, like that one time with the in-laws.

The Times 10/02/10

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Shoprite  Powerful medicine

While Shoprite is actively pursuing growth in pharmacy, with 100 MEDI-Rites now open and pharmacy wholesaler Transfarm now safely under the belt with the Competition Commission’s all-too-rare blessing, certain gimlet-eyed analysts believe that this growth is not aimed at dramatic increases in revenue, in and of itself. Rather, the steely-gazed ones say, it is aimed at increasing convenience for the punters, and thus footfall, much like Money Market and Computicket before it.
Comment: What, one wonders, are the intentions for MEDI-Rite in Africa, where, we are given to understand, there is a shortage of the sort of muti on offer. Handy to have a DC in Pretoria should a continental rollout be on the cards.

Fin 24 15/02/10

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Retail Property  Retail therapy

News to some, we suppose, but the punters remain under pressure, and this in turn is depressing things somewhat for the malls, according to the Lord High Chancellor of the South African Council of Shopping Centres. On the upside, prosperity should return to those marbled halls sometime mid this year. Interestingly, good retail property – like dominant regional malls – is performing better than any other property asset class right now, while bad retail property – like neighbourhood convenience centres – is the worst of the bunch. While analysts predict that listed property will deliver 7-8% this year, the prediction for retail property fund Resilient is a little better, at 10%.
Comment: Recent fears about a global commercial property bubble seem to be receding as the world returns tentatively to growth.

Business Report 10/02/10

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Country Bird  Clipped wings

While revenue rose 14% at Country Bird for the six months to December ’09, operating profit was down 15% to R82.4million. The Feathered One is blaming the slow pace of the economic recovery for this disappointing result, with consumers deserting chicken in favour of cheaper proteins, or simply cutting down on quantities, and imports of chicken up 35%, hitting demand. In fairness though, some of the apparent decline was due to a change in accounting practices, with this having been the first period in which Country owned the Nutri Feed business outright – and on that subject, the feeds side of the business is doing well, with volumes up 17.6% and profit per ton up 8%.

In other Country Bird news, they’ve sold their 22.8% stake in Sovereign Foods for R59million, having failed to acquire a majority stake in the business last year.
Comment: A time of consolidation down at the hen coop, it seems.

Business Day 12/02/10, 15/02/10

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Super Group  Is it a bird? Is it a plane?

If Super Group are to be believed – an “if” that’s diminishing under the steady hand of CEO Peter Mountford – they could turn a profit, excluding the sale of any further assets, as soon as financial year end in June this year. Super Group have R1.23billion in the bank after a rights issue to raise a bit of cash and restructure debt last year, and are busily shedding non-core assets, reducing their business to what they do best – supply chain management, fleet solutions and vehicle distribution. While car sales are down and supply chain activities have been reduced by the recession, Super Group reckon they have enough money for strategic acquisitions when the time comes, looking particularly at expansion in Africa, barring Angola where they were taken for a R197million ride by some dodgy operators.
Comment: As we may have mentioned before, the recovery of Super Group from its R1.9billion loss in ’09 is going to be one of this year’s biggest stories.

Financial Mail 12/02/10

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Inflation  What’s up with that?

In other countries emerging shakily from recession, inflation is either so low as to be non-existent, or even deflationary. But not us, oh, no. For the month of December, we were chugging along despondently at 6.2%, outside of the government’s targeted band of 3-6%, which suggests that our dear old CPI is way too high, and unresponsive to changes in demand. Why, you ask wearily? It’s because state-controlled increases – like electricity, rates, water and education – keep CPI up of nights, no matter how few microwaves and packets of Nik Naks we are buying. Don’t forget, either, that food commodity prices have collapsed internationally, which should bring inflation down, but doesn’t. What about inflation targeting, you ask? Remember those agonising months of upward ticks in inflation and jumps in the interest rate, followed by more of those ticks? Thought so.
Comment: All of which suggests that a less ambitious inflation target of say 3-8% might be in order.

Business Report 09/02/10

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What customers want  How may we assist ma’am today?

The stout, apron-wearing gentlemen of the National Grocers Association in the States, pencils tucked firmly behind their ears and comb-overs stiffly in place, have done a bit of research into what their shoppers really, really want and come up with a handy top ten:

  1. A convenient location
  2. A clean, neat store
  3. Selling products before their use by/sell by date
  4. High quality fruit and veg
  5. Courteous, friendly employees
  6. Private label or store brands
  7. Items on sale or money-saving specials
  8. High-quality meats
  9. Accurate shelf tags
  10. Personal safety outside the store

Comment: Pretty much what the punters would want over here then. Although they might put personal safety a little higher on the wishlist. 12/02/10

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Cadbury  Those crazy Yanks

Kraft are unfairly and predictably getting the blame for the closure of a Cadbury factory near Bristol in the UK, the first move they’ve made since acquiring the great British choccie maker earlier this month. Thing is, Cadbury had already started the shutdown, which was – according to Kraft – too far advanced to be reversed. Cadbury’s 6000 other workers in the UK are apparently feeling the chill...

AFP 15/02/10

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China  Supersize this!

China is going to be the world’s biggest grocery market by 2014, overtaking the US, with a predicted value of $761billion. China’s economic growth, population growth and relative resilience in the recession are all factors at play. Impressive stuff, until you consider the fact that China has four times the population of the States, or thereabouts. 09/02/10

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UK Retail  Oh, I say!

Our retailers here are taking strain, and no mistake. In the UK, it seems, it’s even worse – January sales were the worst they’ve been in 15 years, with numbers down 0.7% last year, with non-food and discretionary items hit worst. On the upside, while the heavy snowfalls hit sales from stores, internet mail order and phone sales increased by 14.6% year on year. 09/02/10

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