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Last week, Pick n Pay announced that it would be seeking to raise up to R4bn in a rights offer by the middle of the year, to stabilise the business with a rapid injection of cash into its coffers. It also announced that it would be unbundling the successful Boxer business in a new listing on the JSE, although Pick n Pay will retain the majority stake. This will enable Boxer to continue opening new stores to meet consumer demand, while CEO Sean Summers has placed a moratorium on the opening of any new Pick n Pay stores. Also of note is that to retain control of the Group, the Ackerman family will have to invest at least R1bn of their own in the rights issue, something they may be unwilling to do. A rights issue, you will recall, is an offer to existing shareholders to purchase additional new shares in the company at a discount to the market price on a stated future date. Pick n Pay’s stock price experienced its biggest drop in over 25 years on this flurry of announcements.

Comment: Tough times, tough measures. One thing CEO Sean Summers is not afraid to do is to make difficult decisions.

Those Woolies interims you were asking about. Turnover was down an eyewatering -23.6% to R38.1bn but hold your horses: revenue from continuing operations – i.e. excluding the loss of sales from the disposal of David Jones in Aus – was up +5.4%, with the core Food business up +8.4%, supported by on-demand service Dash. Fashion, Beauty and Home grew a significantly more muted +2.2%, while sales at Country Road declined -5%. Gross profit was up +4.0% to R13.8bn, but operating profit from continuing operations was down -12.1% as expenses grew +9.9% to R10.9bn. A setback, admits Roy Bagattini, but not one that is going to set the business back. And he has plans: “We have recently launched Woolworths Ventures, a dedicated team and simplified processes that will bring exclusive focus to our strategic growth initiatives,” he says, “accelerating new revenue streams and harnessing the potential of our talented people to attract new customers to our trusted Woolies brand.”

Comment: For more data and insights on the Woolies interims, have a look at this excellent summary from our analysts.

Standard Bank has just lent Shoprite a whacking great pile of cash to help the retailer expand its supply chain, in a R1.2bn transaction that is one of Standard Bank’s largest vehicle and asset finance deals ever. And speaking of big: Shoprite is adding over 200,000m² to its DC capacity over the next year, hence the need for more trucks. Moving on, a trading update from SPAR, which reports that its turnover for the, erm, five months through (checks notes) mid-Feb grew +9.3%. No mention of the bottom line, although the retailer did note that its “trading performance should be viewed against the backdrop of tough trading conditions in all markets.” In Ireland and southwest England sales grew +7.1% in euro terms, but Switzerland declined by -5.7%. Online food and liquor sales grew a monstrous +450% through its SPAR2U channel. Net debt stands at a daunting R10bn, but it has no plans to raise any further cash from shareholders right now.

Comment: A smart move from Tesco as it takes into consideration the needs of a key demographic. More retailers would do well to follow this example.

Chinese consumers — once the mainstay of luxury goods — are laying off the big-ticket items as job insecurity and a property crisis take hold of their economy. Consumer prices have fallen for four straight months, intensifying a price war among retailers on middle-market goods, and making the pricier ones harder to sell. So, for example, Starbucks – perceived as a premium brand – has lost share to local outfit Luckin Coffee Inc. And cosmetic brands like L’Oréal and Shiseido have also taken a hammering. Moving on, a brilliant innovation from Tesco this week, who are rolling out a new product label, the MTick, which identifies menopause-friendly products showcased in a curated section at the end of aisles across nearly 200 stores throughout the UK. The initiative enables those experiencing menopause symptoms to make informed choices about their health and well-being, and features products that include Vitabiotics vitamins, skincare by Nivea, Olay and Simple, and personal care items from Tena and Always.

Comment: A smart move from Tesco as it takes into consideration the needs of a key demographic. More retailers would do well to follow this example.

It’s been a long while since we reported on the fortunes of our old friends at Adcock Ingram, but now on the occasion of the release of its interims, is as good a time as any to resume. Turnover increased +1% to R4.7bn in the six months through December, while despite price increases, profit fell -5% to around R444m. The business notes that the consumer is under pressure, but also that port delays did not help the cause, with products from India including the popular OTC med Allergex basically out of stock and on back order. Adcock will accordingly be manufacturing small batches of such drugs locally, as it has no expectations that supply chains will fully recover in the near term. One positive is that the Government increased the single exit price for prescription medication by a hefty +7% this year, which has helped Adcock maintain margin.

Comment: A rising tide lifts all boats. And an ebbing economy lets everybody down.

More trading updates. First up, Libstar, owner of Denny Mushrooms and Lancewood cheese, and a mushroom factory that burnt down, although the R120m insurance payout has helped pad the numbers somewhat. While overall volumes fell -4.8% in the year through December, HEPS are set to rise somewhere between +23.5% and +28.5%. And Group revenue was up +7.3% on strong performances in both retail and food service, as well as price increases. Next, Tiger Brands reports that Group revenue for the four months through January declined by -1% year-on-year, with volume declines of -8%, offset by price inflation of +7%. Finally, SA’s largest egg producer Quantum Foods reports that it is seeing an improvement in both trading and margins, resulting in part from a reduction in feed input costs and fewer hours lost to load shedding in the four months through January, and despite the loss of around R37m in birds from an avian influenza outbreak at its Northwest farms. But while they contracted egg production from farmers in lower-risk areas at lower risk from bird flu, egg supply was still about -60% lower for the period.

Comment: The poultry industry has been a rare bright spot in our sector these last weeks, with all of the major producers reporting better than expected performance.

In this section we generally report on the big macro-economic forces at play in our fiscus, and the indicators that represent them. In this instance, we’re talking about Amazon, which is a whole array of macroeconomic forces all on its own. And not just for the retail sector, which is buckling up as Amazon prepares to storm the Foreshore: did you know, for example, that Amazon is turning over around US$40bn a year in ad revenues in North America? This is potentially huge for the digital advertising landscape here in SA, with Amazon offering both reach and bolt-on services other platforms will struggle to compete with. The Amazon Demand Side platform (DSP), for example, will allow advertisers to leverage Amazon’s user data and advertising tools to target customers that are already shopping for what they sell. And Amazon’s vast volumes of traffic and its expertise in cloud computing enable it to scale a programmatic platform that no South African e-commerce company could realistically compete with.

Comment: Good news for brands, bad news for other platforms competing for their advertising buck.