Trade Tatler
“Just because it happened in a fictional movie about a robot policeman doesn't mean it's right.”
Daniel Friedman


THIS ISSUE:     01 Feb - 07 Feb

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Shoprite  What doesn’t kill you…

Sorry Shoprite, which has endured something of a ragging at the hands of the business press and the analysts this last week. After the disappointment at its interims, upon which we reported last week, some interesting commentary. There are those who believe that the business over-invested in their new IT system and distribution centre at a time when the embattled SA punter could not support that sort of spending. Others argue that new auditor reporting standards have played merry heck with the final presentation of the underlying numbers. Still others, more prosaically, point to deflation in food and Shoprite‘s exposure to the stressed lower end as being the chief culprits.
Comment: Shoprite’s seemingly unstoppable ascent was the great story of the last decade. It is to be hoped that the recovery will be one of the big reads of the next couple of years.

Tatler Reporter 04/02/19

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Clicks  Cuts like a knife

It’s a slow news week, so gather round and we’ll spin you a yarn about ladies’ razors which at time of going to press probably won’t even be available any more. In order to free up some space in their razor-dispensing shopfittings, no doubt, Clicks discounted seven variants of their Gillette Venus cartridge packs in a “Four for R142” offer. Clicks, of course meant four blades, which is the number you get in a pack; the punters, of course, thought that Clicks meant four packs, and this led to, shall we say, deep discounts of up to 88% a throw. Razor blades being made of the stuff from Avatar, or meteor steel or something, there was something of a run on the commodity as it were. Clicks to its credit decided they’d honour the letter of the ad rather than its spirit, and as a result, you could get razor blades for less than the price of a small family car, at least until five minutes ago.
Comment: Never mind Clicks. Cathay Pacific recently made the mistake of putting a whole bunch of first class tickets up at cattle-class prices, or a discount of a cool R200k. And they did it twice before they learned their lesson.

Business Insider 28/01/19

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The Powers of Retail  A new power is rising….

So the Deloitte’s (grandiosely titled) ‘Global Powers of Retail’ 2019 report is out, and good news for Shoprite, in a bittersweet way, is that with the collapse of Steinhoff into scandal and penury, the Big Red One was our globalest power of retailness back in FY2017, in a solid 86th place. SPAR made it into 140th place, with Pick n Pay in third at 160th and Woolies at 179th. Number one was Walmart, with turnover of half a trillion dollars, followed by club-discounter Costco at $160bn. While our retailers are relatively small globally, Africa looks promising, second only to Latin America in regional growth in that FY. And retail itself seems a good space in which to operate: the top 250 cumulatively grew revenue +83% over FY2017, for total global value of $4.5trillion.
Comment: A bit of perspective there. SA retail is relatively small, globally, but has lots of potential, while in terms of shopper in-store experience and ranges on offer – it can be argued – sits alongside those at the top of the log.

Tatler Reporter 04/02/19

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Clover  The Land of Milk and Money

Woah. This is big: Purpose-built international investment consortium Milco is offering R4.8bn for shares in that icon of our childhood, Clover, whose bottles of milk and fresh orange with their aluminium tops would appear as if by magic on our doorstep every morning. The consortium is led by the Central Bottling Company (CBC) of Israel, which will own around 59.5% of the Clover shares if the deal goes through. The rest of the partners are local luminaries Brimstone, and international investors Ploughshare and IncuBev. A final 6% would be taken up by Clover management. The consortium has apparently got the by-in for the deal from just under 50% of the existing shareholders, who would receive R25 per share for their troubles, at which Clover would delist from the JSE. The deal would be funded in part by private finance, in part by banks, and with the international connections of CBC and the Sub-Saharan interests of IncuBev and Ploughsare, could see the growth of Clover into a global or at least a regional force.
Comment: A well-deserved payday for Clover execs, who have done a bang-up job of making a great business greater over the past decade.

Business Day 04/02/19

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Tiger Brands  Fearful symmetry

Tiger Brands is defending – tooth and claw, if you will – its right to the use of words like “Tiger” and “Jungle” in the food industry. Arguably, it’s taking a rather more generous view of its purview than is strictly necessary: its trademark attorney’s Spoor and Fisher sent a letter to Gerald Veldman, owner of the ‘Jungle Foodie’ deli in Observatory, Cape Town, inviting him to have a chat with them about whether his restaurant was in conflict with the popular Jungle Oats brand. Veldman took a look at the names on the letterhead, did the numbers, and promptly changed the name of his business to Fork and Fresh, which will play well with the students who populate the area. Another business, the Harbour House Group, which owns the beer and pizza place ‘Tiger’s Milk’ in Hout Bay, has received a similar letter. Harbour House, being a larger entity, may well decide to fight back.
Comment: Is PR even a thing, these days? When in doubt, don’t take on the little guy, it’s a bad look, however honest your intentions.

Business Insider 01/02/19

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The Economy  Silver linings playbook

“How’s the dear old fiscus doing these days?” you ask. “What’s up with the economy?” Actually things are surprisingly rosy right now, although, granted, petrol’s on the up again. But the producer Price Index (PPI) slowed by more than expected, coming in at 5.2% in December from November’s 6.8%. This hot on the heels of the CPI numbers, which fell from 5.2% to 4.5%. The rand’s been going up against the dollar for just on a month now, and the trade surplus for December (exports vs imports, remember?) was R17.1bn in the black, almost double what the economists were predicting, bless their patchy beards and holy socks. Although to be fair, exports were actually down for the month, to the tune of -13.4%.
Comment: Things are tough, and so they will likely remain for quite some time. But our economy is still capable of generating green shoots and hope – and we’ve shown as a nation and an industry just how much we can do with the latter.

Tatler Reporter 04/02/19

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Woolworths  What’s in a name?

This just in… David Thomas, CEO of similarly-named Woolies subsidiary, David Jones, has resigned for personal reasons. A replacement CEO will be announced in due course, with Group CEO, Ian Moir, working directly with the DJ management team in the interim.

Tatler Reporter 07/02/19

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Coca-Cola  Concentrated power

Coke is buying the balance of the shares in Nigerian juice maker CHI, in which it is already invested, as part of its global strategy of moving out of high-sugar drinks and into emerging markets (although, of course, the one does not necessarily preclude the other). Nigeria, as you know, is a tempting market of 200 million thirsty souls, many of whom cannot get enough of CHI’s flagship product, Chivita.

Moneyweb 31/01/19

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Pick n Pay  Spring into auction

News from Zimbabwe – a rare commodity these days, to be sure – is that shares of Meikles, which runs Pick n Pay and TM supermarkets in that troubled neighbour of ours, are to be put on public auction for the settlement of debts and obligations derived from trying to run a business amid chaos. Meikles is not the first business to be thus afflicted, and it will not be the last.

IOL 28/02/19

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International Retailers  Alternative facts

In the UK, inspired, no doubt, by a global report which points to a diet low in meat as essential to the health of the planet, Sainsbury’s have launched a meat-alternative section in the meat, fish and poultry aisles of 20 of its stores. In India, Amazon and Walmart are being stymied by new regulations preventing them from making exclusive arrangements with sellers, offering deep discounts or holding any business interest in other online merchants. And globally, the inexorable rise of Aldi continues: the Retail Feedback Group report that 42% of survey respondents who shop at Aldi said they plan to shop there even more in the next year, up from 33% in the previous study. And that’s a wrap.

Tatler Reporter 04/02/19

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