Trade Tatler
“Knowledge is power. Information is liberating. Education is the premise of progress, in every society, in every family.”
Kofi Annan


THIS ISSUE:     08 Mar - 14 Mar

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SPAR   Natural mystic

Remember SPAR’s “Natural” concept they introduced last year? Let’s recap: “health and wellness solutions for three specific customer needs: those who have special dietary requirements or food intolerances, those who have made lifestyle choices and changed their eating habits, and those who simply wish to eat more healthily”. Turns out the concept, which was originally introduced in Italy, India, and Oman, has done rather well. It’s now live in 30 stores across the Beloved Country, and they plan, rather cryptically, for “further roll-out” in the ’19, although they’re not saying to what extent. Apparently the response has been great from retailers and punters alike, with the range now accounting for 4.5% of sales at the Athol SPAR in Jozi, to pick a store totally at random.
Comment: Excellent work SPAR, quietly going about the business of expansion and reinvention.

Tatler Reporter 07/03/19

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Big Save  We have ignitions

Shopping isn’t commerce in South Africa: it’s culture, and nowhere is this more evident than at the opening or relaunch of a major independent wholesaler. Take Big Save Waltloo Supermarket and Wholesaler, a member of UMS, for example: the relaunch festivities for the Waltloo Junction Shopping Centre have been running for almost three weeks at the of writing and are only now showing signs of subsiding. Participating stores – to give you an idea of the scope of operations and indeed the scale of the jamboree – include Waltloo Meat & Chicken, Waltloo Bakery Confectionery, Big Save Waltloo Softdrinks, Big Save House & Homeware, Big Save Motor Spares, Big Save Lifestyle Liquor Express, Connie’s Kitchen and Dreamzzz New and Second hand furniture. And the activities? A ‘Strong Man’ competition and trolley dash. The Coca-Cola truck, the SAB music truck, performances by local DJs, and a Kids Corner. Plus, of course, more specials than you can shake a stick at.
Comment: So you might want to take another look at that BOGOF and that gondola end, and ask yourself whether they truly measure up.

Tatler Reporter 12/03/19

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Shoprite  A word to the Wiese…

Last week, we mentioned offhand that the Big Red One was looking at relieving Oom Christo of his inconveniently vote-heavy shares, of which he has a couple or two shoved under the mattress. Easier – or at least cheaper – said than done, turns out. “I really don’t think Shoprite shareholders are in the mood to help fund Christo’s retirement,” said one battle-scarred fund manager. There’s also the small matter that the shares are economically without value, although they represent a major power of veto on special resolutions by the board. But enough about disposal of a legacy that might be holding the business back – let’s talk about the rollout of the new SAP ERP, which weighed so heavily on the bottom line, but replaces the legacy system that was… oh, never mind. In point of fact, the old system was preventing new stores from being easily opened, and according to the Group the new one will be well and truly bedded down by 2020 and properly on fire, in a good way, by 2022.
Comment: We’ve observed, perhaps unfairly, that Engelbrecht is no Whitey Basson when it comes to quippage. “I’d like to be the person who takes over from me,” CEO Pieter Engelbrecht was heard to say recently. That’s almost Whitey-level cryptic, at least.

Financial Mail 06/03/19

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AVI  If the shoe fits…

Anglovaal Industries… a name that rolls off the tongue like a fine brandy at the Polo Lounge. Where were we? Ah yes, the interims through December. Group revenue down -3.2% to R7.1bn, with profit after tax down -6.5% to R994m. Breaking it down, Snackworx grew revenue +3.8% to R2.3bn, although operating profit was down -5% to R429m, and I&J saw revenue decline -2.1% to R1.2bn. What gives? “Our expectation is that many of our categories will continue to have low, or even negative, growth rates until there is a meaningful improvement in the economy,” say AVI, a story we have heard all too often this results’ season. However, they are hopeful of a better second half, especially if I&J catches follow forecasts. The real shocker of these interims, though, is the shoe division, encompassing Spitz and Green Cross, where sales fell -9.2% to R1.1bn while operating profit fell -20.9% to R270.8m.
Comment: Seriously, is it not time to bring in Marie Kondo and get rid of the shoes?

Business Day 11/03/19

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Aspen  A spoonful of sugar

Tough times over at Aspen Pharmaceuticals, which for many years after publication of the first Tatler could, it seems, do no wrong. Now they’re in a spot of bother, with acquisition-fuelled debt up to R53.5bn, and the share price crashing -51% last week as punters decided they didn’t like the plans for reining in that debt. One of the measures is the sale of its baby food business to French outfit (they say “outfee”) Lactalis for R10bn. It’s also looking at splitting its South African commercial pharmaceuticals business into two as yet unspecified units. Aspen’s results were pretty standard for this terrible ambit: revenue up +1% to R19.7bn, but headline earnings down -9% to R3.6bn. The concern is that after the sale of the baby foods business, Aspen might be forced to flog other high-performing or core assets to finance its debt.
Comment: The rise of Aspen was due in part to a unique combination of luck and chutzpah. It is to be hoped they’ll be able to summon some of that magic for the next big push.

Fin 24 10/03/19

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Malls  The malls have years

Time to turn our attention to malls, those latter-day cathedrals to consumerism without which many of us would, let’s face it, be out of business. How are they doing? As might be expected, times are as tough for them as they are for us. Most of SA’s listed property businesses, which own the lion’s share of SA’s malls, have seen sales per square metre slow to low single digits or even decline, compared with the +6-8% growth they were still achieving just five years ago. And other metrics, like foot count and spend per basket are similarly sluggish. Interestingly, though, while averages are down, there are some bright spots. For example, Resilient Reit’s i’langa Mall in Mbombela and Mahikeng Mall saw sales grow at around +20%, while its Rivonia Village in Joburg shrank by -6%.
Comment: In tough economic times, with increasing pressure from online retail, those malls offering a combo of convenience and experience are likely to better.

Financial Mail 07/03/19

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Sovereign Foods  Chicken (not so) Little

Sovereign Foods – SA’s third-largest chicken producer – is taking a majority stake in Eastern Cape poultry wholesaler the Cold Storage Group, which owns five facilities and employs 110 souls in that chicken-hungry region. It has a great customer base and an experienced management team, apparently, and is just an all-round good fit for a business looking to expand its reach and perhaps mount a challenge for the number two slot.

IOL 04/04/19

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Woolworths  Welcome aboard…

Well here’s a turn up for the jolly old books, and no mistake! Fresh – if that‘s the word – from a decade of success at Clicks comes Mr Kneale himself, to take his place as a non-exec on the Woolies board. Although just between you and us, they might like to offer him something a little more, shall we say, active at this difficult point in that great company’s history. He is joined by fellow newbie Thembisa Skweyiya, herself no slouch, coming as she does via Citigroup, Nedbank Capital, and the board of Rothschild (SA).

Business Day 11/03/19

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International Retailers  Aisle have what they’re having

OK this is cool: European supermarkets, taking the whole farm to fork idea to a new extreme, and integrating the supply chain to new heights of verticality, are beginning to grow selected produce in the actual aisles. German outfit Infarm is set to start flogging its growing cabinets, which have their own water supply and light source, to British supers for the growth of greens, salads and herbs, year round. Woolies? PnP? SPAR? Hello? 08/03/19

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