
THIS ISSUE: 01 Jun - 07 Jun
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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SPAR Climb every mountain
Well this is it. The Earth has reached the halfway mark of its 150million km-odd journey around the sun, and bang on schedule SPAR has released another set of interims, albeit uncharacteristically patchy ones. Revenue was up 13.9% to R48.4bn, and gross profit up to R4.5bn from R3.7bn, while operating profit fell 4.1% to R1.2bn. This as operating expenses rose 54.4%, incurred during its acquisition in Switzerland, where sales declined 3.1% for the period. But enough of the past. The Jolly Green One plans to fork out R500m in CAPEX over the next six months to boost the capacity of its DCs, with an expansion in KZN and a whole new facility west of the city of Johannesburg.
Comment: It was ever thus: a decline in profitability after a major acquisition which takes a little time to bed down.
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Shoprite The Rite stuff
In recent weeks, Shoprite has been on something of a streak when it comes to doing the right thing by the community. Last week it was bringing community gardens into the value chain, this week it’s something called a #YellowPacketChallenge, which will run until 9 July, by which South African consumers are to donate grocery bags filled with non-perishables to individuals and organisations in need. And this being 2017, those who’ve bought the bag then get to post it on Twitter or their Facebook page, and challenge a friend to do the same. Shoprite will match each such good deed with one of its own. “It is incredible what can happen when people come together for a good cause, and we want to show that anyone has the capacity to give back and make a difference in their communities,” says Marketing Director Neil Schreuder.
Comment: An initiative reflective of the adage we at Trade Intelligence stand firmly by, that doing good is good business. And indeed sustainability, when approached correctly, is just that.
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Walmart Omnivorous
A slow news week, so we bring you news of oh, we don’t know, just the biggest retailer, make that business actually, on the planet. Walmart, we are reliably told, is growing market share across a whole bunch of categories, with first quarter sales up 2.9%. This equates to a rise in revenue of a not-inconsiderable $2.1beelions over three months. This achievement analysts attribute to its investments in price, its focus on in-store service, and its drive into Amazon territory with the omni-channel approach. They also believe that the business is winning back punters from the frankly awful attractions of dollar stores, and from mainstream grocery retailers like Giant and Safeway. What they’re less certain about is the effect that low-cost Eurotrash retailers like Aldi and Lidl might have once they gain acceptance with American punters.
Comment: An interesting scenario for those of our businesses which are active in the discount segment to watch.
MANUFACTURERS AND SERVICE PROVIDERS
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Tiger Brands Fearful symmetry
A commanding set of interims from the Striped One this week, with revenue up 7% to R16.4bn and HEPS up 9.5%, despite a 36% decline in revenue from subsidiaries Oceana and Chilean fishery Empreseas Carozzi. And also despite a little thing we like to call the South African Economy. Despite the conditions which have derailed the ambitions of a number of businesses this year, Tiger managed to strike a balance between price increases (lifting them by an average of 12%) and volumes (down by 4%). And the stable of brands Tiger brings to market was also a factor: of the 41 it has on its books, 13 are market leaders. On the downside, the export and international division fared badly, with operating income down 25% year on year, at R194m.
Comment: Still, it appears that the dark days of Nigeria and Dangote are receding like a 1986 Corolla in the rearview.
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Nampak Packing them in
More interims, surely not. But yes. These ones from Nampak, which saw record sales in Angola, a pleasing performance in Nigerian metal packaging markets, as well as what our colleagues in the business press refer to as “upbeat” liquid packaging in SA and “buoyant” paper packaging in Zimbabwe. All of this – and despite cash to the tune of R2.4bn frozen in Angola and Nigeria, and sluggish trading conditions with bruised consumer confidence continent-wide – saw operating profits up 30% to R1.1bn. Nampak are attributing this success to improvements in operating efficiencies, and management of costs.
Comment: Two key areas on which all businesses would do well to focus in this difficult age.
TRADE ENVIRONMENT
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Competitiveness This dog needs more fight
At a time when the quarterly unemployment rate has risen to a 13-year high of 27.7%, news also broke that South Africa has slipped a notch on the IMD Global Competitiveness index, dropping to 53 out of a possible 63 on the table, on which Venezuela occupies the bottom slot. We are, not incidentally, bottom of the scale when it comes to unemployment, and more surprisingly technological infrastructure and health and environment too. The index measures, and here we quote from the original Swiss, “the extent to which a country allows private entrepreneurs to create sustainable value for citizens.” Other issues flagged by business school IMD are our institutional issues, including corruption, transparency and gender inequality. Education is a shambles too, characterised by high public expenditure but a poor rate of return. On the upside, we have one of the lowest personal income tax rates and are among the best in private-sector pension provision – factors which should be attracting the international talent which is put off by issues of personal security.
Comment: A sobering read, where we seem to be failing even in areas like technology where we thought we were doing OK.
IN BRIEF
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Checkers They’re ba…aack!
Taking things to Wonka-esque extremes this week is Shoprite, who have launched v2.0 of their madly popular Little Shop line of perfectly shrunken groceries. Only this time, they’re also awarding 20 lucky shoppers who find a tiny golden trolley, a great big trolley full of groceries in a R5000 trolley dash, plus loads of other prizes, from movie tickets to a trip to EuroDisney. We remember the good old days when all it took was the promise of a miniature plastic replica of a pack of Rama to get us down to the supermarket.
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Tongaat Hulett The sweet spot
A cracker set of results from purveyors of quality sugar and fine residential lifestyle estates Tongaat Hulett. The business managed to turn last year’s R15m loss into a R1.27bn profit, with South African sugar revenues up to R390m compared to a loss of R85m last year despite the drought, from which the business is expected to take three years to fully recover. Operating profits in Zimbabwe and Mozambique were similarly pleasing.
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