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THIS ISSUE: 30 Apr - 05 May
Despite the government’s decade-long heel-dragging in finalising the dispensing fees discussion, Clicks has absolutely killed it in pharmacy, growing dispensary sales by 38% in the six months to February, and planning on opening 30-40 dispensaries a year, budgeting R250-R275millions for the job. The idea is to have a clinic and dispensary in each of the 500 stores it is their medium-term goal to have up and running – they’re currently sitting on a total of just over 340. In other Clicks news the group is contemplating a broad-based employee share scheme to help them retain specialist skills and get those BEE numbers up. Comment: Call us curmudgeonly, but broad-based share schemes tend to be a way of giving away a lot of shares to people who may have a stake in how the company performs, but for one reason or another don’t pitch up to AGM’s.
Financial Mail 30/04/10
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Hands-down winner in both the Clicks and Pick n Pay results released last week was private label, which grew 15% at Pick n Pay (including, admittedly, their fresh section) and unspecified but substantial growth at Clicks, where it now makes up 19.2% of group sales. Clicks are targeting an eventual 20 to 25% of sales from private label, which includes such brands currently as Boots No 7, Natural Active and Weetol. No-name all over the show has benefited from punters buying down in the recession and retailers investing in quality in an area where handsome margin is to be made. Comment: A global trend. In an increasingly fragmented market of national brands, loyalty is harder and harder to come by. Enter the man in the suspiciously plain shirt...
Business Report 28/04/10
Le grand Bleu is planning on opening 120 stores in the next few years, in order to win customers away from Shoprite and grow market capitalisation by getting a bigger chunk of both local and African markets. It also has plans to take potentially dangerous muscle-building drugs according to Gareth Ackerman, who announced last week that the company had been put “on steroids”. The first push is likely to come in Zambia, where Pick n Pay have negotiated a 13-store, ten-year rollout with the Zambia Development Agency, although sites are also being investigated in Angola, an economy that is being superheated at the moment by the injection of crude petroleum. One thing the Blue One is not doing is handing over any of its Ackerman-owned shares to the man in the street. Comment: Pick n Pay may have lost the current round on points to Shoprite, but under an invigorated board and with bullish expansion plans, we reckon they’ll go the full twelve.
The limping tanker that was Super Group has been turned around, its bilges pumped and is heading once more into the wide blue yonder of growth and profitability, if Cap’n Peter Mountford is to be believed. The group, or Group, has shed non-performing assets, consolidated and gained breathing space through last year’s R1.2billion recapitalisation. Mountford anticipates that the business will grow organically from here on in, expanding its core operations by gaining market share. Super Group’s supply chain unit accounts for 55% of the operating profit, with fleet leasing coming through at 35% and dealerships the remaining 15%. Comment: Organic growth aside, strategic acquisitions are not to be ruled out.
The Big Blue had a handsome first quarter, growing sales globally to €10.1billion, with profit up 33% to €973million. This as a result of price cuts under the leadership of Paul Polman with the aim of growing volumes and maintaining margin through cost-cutting and efficiencies. One area where costs haven’t been cut, in true Unilever form, is in marketing and advertising. Prices, however, have been slashed an average of 3.3% for the quarter, boosting volumes 7.6%. Rival P&G lifted sales 7% for the third quarter of its financial year, although profits were down 1%, due to higher costs and taxes. Comment: Nice work from Unilever, which was looking tired and flabby not so long ago.
Business Report 30/04/10
Geoff Whyte, Cadbury’s Commercial Director for Africa and the Middle East has quit his post following the takeover by Kraft, which would have involved his commuting between Europe and SA, an environment which continues to inspire him. As marketing director, Whyte oversaw the rollout of smaller, more democratic chocolate bars and the opening of a whole new chocolate market, and wrested the mantle of market leadership from Nestlé in the countlines market, through brand innovation and catchy advertising. Under Whyte, Cadbury set all-time market share highs in each of their three categories – chocolate, candy and chewing gum. In ’09 Whyte was voted Marketer of the year by a jury of his notoriously pointy-shoe’d peers. Comment: Promising young fella, then. We may have something for him over at Tatler Towers.
Inflation, like the snow goose, continues to wing its way south, passing the 5.1% mark YOY for March, and is predicted to roost, briefly, below 5% some time after May before turning around and heading back up. Food inflation has hit 1.3%, dangerously close to deflation for the retailers, but providing some measure of relief for the embattled punters. A bumper crop of maize and the relative strength of the rand (which itself may head south as investors flee to safer havens after the Greek Tragedy) are the usual suspects in this case, with the part of Kaiser Sozay being played by Gill Marcus and her endearing propensity to slash rates. Comment: Add to these favourable numbers the madness of the *2010 Trade Tatler World Cup Soccer Tournament™, and we could be in for a mini consumer boom in the next couple months, harking us back to those last heady days of ’07.
Business Report 29/04/10
The Consumer Protection Act came into partial effect a couple weeks ago to universal indifference, it would seem. Consumers can now sue manufacturers and retailers for damages for selling flawed or harmful products, but that’s pretty much where it stops. According to the harrumphing armchair-dwellers of Werksman’s Attorneys, this is because the Act is a toothless behemoth, its savagery not backed by the regulations which would put it to work. These regulations should have been available months ago, but as yet have not emerged from the deliberations surrounding the Act. They would spell out stuff like who the Act applies to and who is exempt, what assistance is available to consumers seeking redress of one sort or another, and how the Act will be enforced. Comment: If it’s enforcement you’re after, there are a couple of Teazer’s bouncers looking for work.
The jobless figures for the first quarter are on the horrific side – 25.2%, up from 24.3% in the last quarter of ’09. The jobs in question were lost mainly from finance, construction, trade and manufacturing – the pillars of the economy. In not unrelated news, Defence Minister Lindiwe Sisulu is floating the idea of a new National Service, to discipline and skill the army of disempowered and angry youth, who are the shock troops of service delivery protests.
Business Day 05/05/10
In a move that may or may not interest Pick n Pay and Shoprite, Asda has taken the battle for value perception to the next level, offering a full refund to punters who could have bought a comparable basket of 8 items (drawn from 13 000 branded and private label lines) cheaper at Tesco, Sainsbury’s or Morrisons. They’re calling it their “final shot” in the supermarket price war. Banzai!
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