School of Retail
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THIS ISSUE: 26 Aug - 01 Sep
Turnover was up 7.9% to R23.7billion over at Woolies, where the Dapper One reported a somewhat less understated increase in profitability to the tune of 23%, to R1.76billion for the year to June. Some of that handsome profitability came courtesy of the sales of a majority stake of its financial services unit to ABSA for a suave R380million, although this was offset by a foreign exchange loss of R57million. The Woolies' consumer, it seems, has recovered from her panicked state of early ’09 and is picking her way through the kikuyu grass back to the waterhole. Further abroad, and despite a battered Aussie punter who has sustained 6 eenterest rate hoikes, County Road continues to bring in the swag and will thus not be sold to any of the apparently willing buyers who are circling it like dingoes round a wounded jumbuck. Then back to the savannah, where things are looking up for expansion in East and West Africa alike. Comment: When the story of our age is told at last, Woolies’ marvellous weathering of the great decession will be one of its most thrilling chapters.
Business Report 27/08/10
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25,000 SACCAWU members employed by Pick n Pay are about to join the general melee in the near future and come out on strike, for higher wages, if Cosatu are to be believed. Saccawu alleges that Pick n Pay management has “unilaterally and unjustifiably” terminated a job security and job flexibility agreement, causing serious tensions on the shop floor, and also that the Big Blue is trying to “frogmarch” it into a multi-year wage agreement. The union is also miffed that Pick n Pay has cancelled its sponsorship of the annual shop steward’s council, where management had a platform, however shaky, to share its hopes and dreams with labour. For its part, Pick n Pay says it has received no notice of the strike, which might also include a consumer boycott. Comment: There is a better way for both unions and management, and its name is mediation.
News 24 30/08/10
A couple of neglected gems from Shoprite’s results last week. The Big Red One is in full cry in Nigeria, where it plans to open 20 new outlets in the next two years, and may be borrowing a heaping pile of cash to help it achieve this, through, inter alia, its investments in systems and logistics infrastructure among other necessary items. Shoprite intends opening a total of 85 stores in the current financial year, many of them Usaves. And then those sundry items, about which Messr’s Basson and Goosen were so coy at the presentation. These have increased from around R300 million in 2009 to R500 large in 2010. Mr Goosen flatly refused to talk about what might make up the increase when pressed, while Mr Basson made reference to “electronic items” with a twinkle in his canny eye. Comment: There are whisperings abroad concerning a whole new approach to mobile-based CRM, and more. Let’s wait and see.
Tatler Reporter 30/08/10
Would you look at the mags on that! Turnover up 2% to a Clarksonesque R53.4billion, and operating profit positively screaming ahead at 34% for a nox-powered 3.3billion. The reasons for this according to Imperial CEO Mr Hubert Brody, are several. While the significant cost savings made over the course of the year were a factor, the improved positioning of the Hyundai and Kia brands, the 20% increase in car rentals over the World Cup, better volumes in the logistics business as the economy improved and the recovery in vehicle sales all had their bit to play too. The reduction of debt in the balance sheet suggests that the business might be positioning itself for the odd strategic acquisition, which would typically complement existing business rather than transforming the organisation. Comment: Easy there, big guy!
Are you paying attention? Here’s a new word for you: realisations. These are the combined sales of the constituent parts of a chicken, and the bad news here for Country Bird is that they fell over the past year, seeing profits drop an adjusted 11.5% to R122.2 million, although revenue was up 9% to R2.4billion. The chicken price has fallen victim to flagging demand as SA shed almost a million jobs over the recession. The strategy for producers like Country Bird has been to grow volume, benefit from scale and cut costs where they may – for example in the area of grain procurement. When the upswing arrives, as it inevitably will, measures taken in leaner times will surely find their way to a healthier bottom line. Comment: You must try the fricasseed realisations. They’re exceptionally tender.
Business Day 24/08/10
Distell grew turnover 8.7% to R11.8billion for the year to June, although thanks to a stronger rand, its foreign growth took a hammering to the extent that operating profit beyond these shores fell 19.4% to R389 million – although at home it grew 1.2% to R1.39billions. Where is Distell making all its cash these days? 51% of volume, you may be surprised to learn, and 31% of sales, comes from ciders and RTDs, those sweet and fizzy things beloved of matric dancers everywhere. Oh, and Amarula has had a cracker of a year, having been identified by those racy chicks in Far Side spectacles and lab coats over at Euromonitor as one of the world’s fastest growing spirit brands. Comment: When times get tough, as they have been, who doesn’t like a tinkling glass of Amarula Cream alongside a crackling wattle fire with Eckard Rabe?
Fin 24 26/08/10
Let’s face it, it’s not for everyone, but if you happen to know your way around enterprise resource planning software, SAP’s the man for you, having been rated the Best Employer in SA for 2010/11 by the CRF institute, who also found that professional services firm Accenture came in at number 2. Keeping the Consumer Goods Industry flag flying in the overall category were Coke (at 4) and BAT (at 10), while Unilever and Clicks came through for us at 5 and 8 respectively in the large-sized employers category. The key to getting in there? Great HR apparently. Comment: And who among us doesn’t like getting the back of their hand stroked gently every now and then?
Coca Cola, who came first in the Sunday Times Top Brands survey, followed by Nike? No. Castle? Think again. Koo, would you believe, which has been keeping us all in baked beans and apricot jam for how long now. Coke also topped the Community Upliftment section, with Pick n Pay, you will be pleased to know, in third, and Le Grand Bleu also topped the Green section, pipping an understandably downcast Woolies to the post. According to TNS Research Surveys, who pulled the whole shebang together, recessionary punters are still turning to the brands they love and trust in the downturn, and to brands they perceive to have a proudly South African element. Comment: Fitting, as the entire discipline, if that’s the word, of branding was virtually invented by the manufacturers of the sugary brown stuff with bubbles in.
Tatler Reporter 31/08/10
More on those Massmart results. While at 0.1% operating profit was on the low side, some of the other indicators are very positive – trading space up 8.5%, with a total now of 288 stores, six having closed, 18 having opened and 20 having been acquired. Massbuild proved to be a star performer, with operating profit up an architectural 24.6% in an otherwise flat building market, and home improvement and general merchandise coming in strongly with sales up 15%.
One final award. Nestlé took the prestigious President’s Award in the annual handout from the catchily-acronymed International Union of Food Science and Technology (IUFoST), who recognised the business for providing quality, safe, nutritious food products to grateful punters everywhere.
Don’t hold your breath for the implementation of The Consumer Protection Act, due out in October, but now more likely to come into effect another six months after that, mainly because of its “vast scope”. Like our Maths homework. CGCSA, in the meantime, is hamstrung in its efforts to appoint an industry ombud as a means of alternative dispute resolution mechanism, until details of the legislation are ironed out.
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