Category Archives: #southafrica
Starbucks SA brand owner, Taste Holdings, is basking in the warm response the coffee chain has had since its local launch in April – and has detailed its plans for the franchise moving forward.
Taste reported its results for the full year ending 29 February 2016. Core revenue was up 41% to R1.01 billion, however Core EBITDA decreased to R47.2 million, while HEPS sunk massively to 1.5 cents per share from 16.1 cents per share in 2015.
This was due to increased borrowing and additional shares in issue, along with a depreciation increase caused by the corporate store ownership strategy involved with Domino’s pizza.
The group added 74 Domino’s Pizza chains in 16 months, and moved from having no corporate-owned franchises to having 26.
“Moving from no corporate stores to 26 in just four months, did not allow sufficient time to establish the necessary systems and controls, nor the human resource capability to align partners with the Domino’s culture and systems,” Taste said.
“This misalignment has been the root cause of many of the stores challenges and ultimately reflected in our short-term earnings. We are however confident that these challenges will be overcome in this year.”
Despite the Domino’s downer, the group was extremely happy with its launch of Starbucks in the country, saying the launch exceeded its – and Starbucks Global’s – expectations, with with queues still visible at the outlets weeks later.
“Our food offering is performing better than we envisaged and we are pleased with the adoption of the brand by the younger population – a segment that we believe is considerably underserved among South African offerings,” Taste said.
“We have also been able to offer what we believe is simply the fastest free Wi-Fi in a public retail food setting in South Africa.”
Looking at its strategy for Starbucks moving forward, the group said it would proceed with caution, having learned from its costly mistakes with Domino’s.
While the group previously said it would look at adding 12-15 new stores a year, it has now said it will rather focus on single-store profitability and testing out new concepts and formats for the brand.
Included in this is a trial for a drive-thru format for Starbucks in South Africa, which is expected in the “early roll-out” phase of the brand’s launch in the country.
SOUTH Africans’ desire for new shopping centres has been insatiable, and another mall has entered the fray.
After months of anticipation, the R4.9bn Mall of Africa, located next to the N1 highway in Midrand, opened on Thursday. The 131,038m² shopping centre is the largest first-phase completion of a mall in SA to date. It is still far smaller than malls in many developing Asian countries, which tend to average around 300,000m².
“The opening of this iconic mega mall marks a significant strategic milestone for retail in SA and indeed takes the African retail experience to a totally next level,” said Morné Wilken, CEO of listed property fund Attacq.
“As the 80% owner of Mall of Africa, the opening of the Mall of Africa marks a significant business milestone for Attacq and our business environment. Mall of Africa is a world-class lifestyle and retail destination, bringing significant value to the offering of the Gauteng province as the southern African sub-continent’s commercial powerhouse,” he said.
By 1.30pm, 70,000 people had walked into Mall of Africa. Mr Wilken said many customers were taking advantage of opening sales by large stores such as clothing retailers H&M and Cotton On and electronics group Dion Wired. Starbucks had also opened its second branch in the country and was “trading extremely well”.
“We are really excited about what this mall can do. It is located in an extremely good position. Shopping mall culture is very much entrenched in South Africans. In Gauteng, we hang out at malls. Families go to malls. It’s what we do. We feel we have built a centre which has a strong choice of tenants, more space and more facilities than any other shopping centre in SA,” said Mr Wilken.
He added that the mall would act as a strong catalyst for demand for premises in the surrounding Waterfall City, which had a further 663,815m² of bulk available for development.
“Waterfall City is seen as one of the most significant South African commercial developments of the decade. We feel all of its components will support one another and it will be a very successful development for decades to come,” said Mr Wilken.
Mall of Africa has around 300 stores and Attacq plans to extend it by about 25,000m², depending on market demand. Mr Wilken said the mall’s size meant it could support a variety of tenants.
The new mall, however, is not nearly as big as malls in many other developing continents.
In comparison, SM Prime Holdings owns the Mall of Asia, which is in Pasay, Philippines. This super mall is being extended from 400,000m² to 700,000m² and will have 1,300 stores.
Stanlib’s head of listed property funds, Keillen Ndlovu, said the Mall of Dubai in the United Arab Emirates was about 502,000m².
Other malls in Africa, however, tended to be smaller — aside from the Cairo Festival City Mall in Egypt, which was 168,000m². The Mall of Arabia, also in Cairo, had about 180,000m² of gross lettable area.
There are about 40 shopping centres sized 20,000m² or more that have been announced or are in production in SA, according to the Southern African Shopping Centre Directory of 2015.
Patrick Flanagan, head of development company Flanagan & Gerard, said developers must be careful where they build malls in an already saturated market.
“I think developers need to be careful. There are many shopping centres that have been announced which just won’t be sustainable in certain areas. Quite a few smaller centres are difficult to tenant in a slow-growth economy. We are also not a nation of shopowners like in the UK. We tend to rather shop at large retailers, so bringing more convenience centres to market can be risky,” he said.
Commenting on the Mall of Africa development, Louis van der Watt, CEO of the developer, Atterbury, said: “In line with the Atterbury vision to create working, shopping and entertainment spaces for everyone to live to their full potential, the development of this breathtaking shopping and leisure destination introduces an unmissable, unmatched retail experience. Mall of Africa’s exceptional scale, design, location and retail mix places it at the forefront of development.”
Van der Watt added: “The development has enhanced the diversity of the retail sector in South Africa, changed Gauteng’s skyline and stimulated the economy.”
Mall of Africa is co-owned by two leading South African property companies: JSE-listed real estate capital growth fund Attacq holds the commercial development rights to Waterfall and owns 80% of the Mall of Africa; Atterbury Property Developments owns 20% of Mall of Africa and is responsible for the Mall of Africa development project, on behalf of Attacq.
Mall of Africa will feature over 300 retailers, restaurants, entertainment and services. It also has all amenities that shoppers may need. Atterbury Asset Managers is responsible for Mall of Africa’s asset management for its co-owners.
Gauteng’s Mall of Africa to open on 28 April
Atterbury began the construction of Mall of Africa nearly three-and-a-half years ago, on 28 October 2012.
While the mall comprises some 130,000m² of gross lettable area, James Ehlers, MD of Atterbury Property Developments, noted that its construction area covers 550,000m² – or 78 rugby fields. A stroll around the building’s perimeter will take you on a walk of 1.75 kilometres.
Ehlers also reveals that over six kilometres of shopfront has been created inside the Mall of Africa. More than 530 kilometres of post tension cable has been used in its construction, as well as 18,500 tons of rebar and 205,000 cubic metres of concrete.
Hundreds of jobs
During the construction of the Mall of Africa, 3,078 people were employed for the project and, by January 2016, they had worked 10.41 million man hours.
“When the centre opens, hundreds of permanent and part-time jobs within the centre will be created on a sustainable basis,” said Ehlers.
A mall of the magnitude of Mall of Africa has massive pulling power for shoppers in the region and beyond, driven by its distinctive retail experience across two levels of exceptional shopping.
Lucille Louw, MD of Atterbury Asset Managers, confirmed that the Mall of Africa will open with seven anchor tenants and an array of international retailers that have chosen to debut their brands to South Africans at the mall, as well as an appealing line-up of flagship stores for all major South African retailers.
“Mall of Africa’s carefully considered retail mix creates a unique experience that is a major attraction. It offers a well-balanced variety of local and international brands, services, speciality shopping, entertainment and eateries. There will be something for everyone, with 2.4 kilometres of shopping and an exciting selection of 300-plus stores,” said Louw.
Anchor tenants at the Mall of Africa include Checkers, Edgars, Game, and Woolworths. They will be joined by leading South African brands from The Foschini Group, Mr Price and Truworths.
Top international brands
Louw revealed that top international brands opening their first stores in South Africa at the Mall of Africa include: Armani Exchange, Helly Hansen, Asics, Zara Home, The Kooples, Under Armour, Mango Man, women’secret and the Amsterdam-based Soap Stories.
These new retailers opening in the country for the first time will join a full pack of favourite brands like: H&M, Forever 21, Forever New, River Island, Mango, Starbucks, and Versace.
Louw added: “In addition to its exciting shopping appeal, Mall of Africa also includes endless entertainment. Customers can enjoy a state-of-the-art nine-screen Ster Kinekor cinema complex with Imax, and an extensive selection of 12 restaurants, fast food stores, coffee shops and cafés.”
One of the many leisure highlights at the Mall of Africa is a magnificent outdoor park with a children’s play area featuring an interactive musical water fountain.
A major benefit of the Mall of Africa is its central location in Gauteng and easy access from all areas. It is situated in Waterfall City, halfway between Joburg and Pretoria. It is highly accessible, located adjacent to the Allandale Road exit of the N1 Highway, the first free-flow intersection of its size in Africa. Atterbury has undertaken major road upgrades around the development to make it easy for shoppers to arrive at the Mall of Africa’s 26 entrances.
The mall has around 6,500 parking bays, most of which are undercover. It also offers valet parking, special drop-off facilities for buses and dedicated Uber pick-up and drop-off points – a first in the South African retail environment. It is also minutes away from the Gautrain Midrand Station.
Cobus van Heerden of Atterbury Property Developments commented: “Our commitment to responsible development, energy efficiency, sustainability and the implementation of green strategies is evident in Mall of Africa’s inspired design, construction and operational practices. As a developer, it is crucial to ensure the assets we create are environmentally responsible and as energy efficient as possible.”
The project implemented multiple green technologies, including a massive photovoltaic installation on the roof of the Mall of Africa. The installation will be the largest in Africa and will provide 4.8MVA of sustainable power for the centre. The mall will use grey water harvesting in all public toilets and for the irrigation of the entire development. Its design means natural light is maximized in the mall in such a way that shopper comfort is also optimised.
Van Heerden said: “Atterbury’s vision was to develop the highest quality retail property that offers an exceptional overall shopping experience and is a real asset to its owners, retailers and customers. We are excited this is now becoming a reality and can’t wait to share the Mall of Africa experience with everyone when it opens on 28 April.”
CLOTHING and apparel retailer The Foschini Group (TFG) is looking for retail space to bring its recently acquired UK chains Phase Eight and Whistles to its home market.
The group’s chief financial officer Anthony Thunström confirmed Phase Eight expansion plans in SA, saying: “We are currently looking at locations for Phase Eight. We probably will bring a limited number of both Phase Eight and Whistles stores to SA, (but) they could only be in your absolute premium shopping destinations.”
Mr Thunström said that the retailer thought it had a location, in Johannesburg’s Hyde Park mall, but had found that it was better suited for its G-Star Raw clothing store.
There was “massive growth that we continue to see in SA, and that really is because of the diversity of the different brands that we’ve got”, he said.
The group, which owns brands such as Markham, Mat & May, Charles & Keith and Donna Claire, acquired Phase Eight for £140m last year to spring-board its UK portfolio.
Last week, TFG announced it had bought a 100% stake in high-end mass market retailer Whistles for an undisclosed amount.
Kyle Rollinson, an analyst at Avior Capital Markets, said TFG’s expansion of Phase Eight into local markets would add value to its retail offering.
“Foschini has an extremely good portfolio of brands and I think it’s more of a value add, rather than trying to counteract a weak offering. Their offering is strong,” Mr Rollinson said.
TFG is no novice. Woolworths introduced its private label brand David Jones into its South African stores earlier this year, after it acquired the Australian-based women’s wear retailer in 2014 for R23.3bn.
Mr Thunström said: “I don’t think from a strategy point of view anything has changed … there is an advantage in risk diversification in terms of being in different geographies, and it’s certainly been a rand hedge.
“The reality is within this financial year … we will have opened roughly 200 stores in SA this year, and if I look forward over the next five years, we’ll open between 9,100 new stores in SA, so that’s massive growth that we continue to see.”
Chito Siame, an equity analyst at Mergence Investment Managers, said: “I don’t think that would be their primary strategy with regards to recently acquired foreign brands.
“Phase 8 would probably roll out faster in a Macy’s than back home. They are searching for growth, and they’ll buy it if they have to.”
Phase Eight has 107 stores and 203 concessions throughout the UK and Ireland. It also has 15 stores and 113 concessions in 16 global markets.
TFG shares gained 1.02% to close at R141.44 on Thursday.
Cape Town – South African retailer, Kids Emporium is set to open in the UK.
The opening of the new store will be complemented by the launch of the Kids Emporium UK online store.
South African owner and founder of the Kids Emporium franchise stores in South Africa, Lauren de Swardt, opened her first flagship store at the tender age of 22 years. Kids Emporium has since entrenched itself in the marketplace. Its brand strength stretches to the whole Kids Emporium shopping experience, introducing a cohesive world of expert parenting knowledge aimed at educating new parents, backed by good old-fashioned service.
De Swardt has developed the brand, with 26 stores now operative throughout South Africa, over the past 13 years.
“We want our brand to be accessible in the United Kingdom, offering the market affordable, innovative South African product lines, previously unavailable to locals. Seventy percent of the goods in-store will be manufactured in South Africa, with the intellectual property based in South Africa and the business operative in the United Kingdom,” said De Swardt.
Franchise applicants are carefully selected – the challenge with the Kids Emporium brand is to translate passionate service levels into interest. The company ethos is to equip pregnant customers with accurate knowledge, and de Swardt insists on personal customer attention because she believes her demographic, pregnant women, is one of the most challenging.
Guildford store franchisee and mother of two, Storm Copestake, was chosen to run the master franchise. Owner of the Ruby Rabbit baby-centric clothing range in the UK, Copestake has years of industry experience.
Product offerings will include exclusive ranges of children’s toys, gifts, furniture, décor, children’s wear, and maternity essentials with a difference. Some of the top local South African brands include baby bath apron and snuggle blanket range, Lily and Jack, Thandana luggage, sublime kids clothing brand, Sticky Fudge, and many more.
De Swardt says that logistically goods will be shipped across to the UK.
“It makes financial sense to do this. We are bringing a global brand to the UK that is renowned for good service from a nation of hard-working people and we’re proud to offer high-end products that are value for money. It’s a massive milestone, the United Kingdom was chosen as a first stake, and we see the opportunity for a store that offers something completely different,” said De Swardt.From Fin24.com
Al Futtaim Group, the Ikea operator in the region, plans to open another store in Dubai in the next two years.
An Ikea official said that despite the challenging economic climate in the UAE, sales at the Swedish retailer had not been hit despite footfall at its stores in the emirates slowing between by 1 and 2 per cent so far this year.
However, its online offering doubled its sales last year compared with 2014 and its in-store restaurants have delivered huge growth.
“Even in 2008, when the financial crisis began, Ikea posted increasing sales,” said John Kersten, the managing director at Ikea for the UAE, Qatar, Egypt and Oman.
“Ikea does well in times of crisis. We know the retail climate is challenging as companies that we use are now offering deals that have not been available before.” He said Ikea sold three and half million plates of meatballs and 730,000 shawarmas in the UAE last year. “With those numbers we can keep prices very low,” Mr Kersten said.
The Swedish brand has posted double-digit growth in sales in its outlets across the UAE, Qatar, Egypt and Oman for the past four years.
Last year, the retailer also opened a customer ordering and collection point in Al Ain.
Yesterday Ikea said that it had chosen Abu Dhabi as one of three stores worldwide, including Canada and Sweden, to pilot a new store solution.
The “make a room for life” concept embraces the four walls of most people’s living spaces by offering a total design solution from floor to wall to ceiling and the soft furnishings in between.
The living room, a 2,500 square metre space at Ikea’s Yas Island store, is the first area to offer the experience, but the new concept will be rolled out across dining, bedroom and kitchens this year.
“We feel there was a lack of inspiration in Ikea. Everything has been created to inspire in the new concept.”
Mr Kersten added that the Arabic, Asian and European-styled concept rooms would cater to the different tastes of the population in the UAE.
“[Abu Dhabi] was chosen as a pilot store because we saw from our experience in Qatar that the Ikea concept needs to be tailored to the locale,” he said.
Cape Town-based Foschini, With 2,000 stores in South Africa, is the latest South African company looking to the U.K. to diversify revenue sources as the rand weakens to around 23 percent against the dollar, the Telegraph reported.
An independent chain store, Foschini has 17 retail brands that it sells — mainly under its own private label — in clothing, jewelry, accessories, sporting and outdoor goods, cellular and home ware.
Foschini bought Phase Eight, a British women’s designer clothing brand in 2015 and now it’s after U.K. clothing brand Whistles, the Telegraph reported.
Whistles has 49 stores in the U.K. plus concessions in department stores including Selfridges, Harrods and Bloomingdales.
There are several prospective buyers and Whistles has asked advisers at professional services company KPMG to prepare for a sale, the Telegraph reported.
If a Whistles takeover happens, it will be the latest in a series of South African companies buying British retailers.
Acquisitions of Western businesses by overseas buyers are at an all time high and growing, according to New York City-based professional services firm Deloitte.
Mergers and acquisitions are becoming increasingly popular for foreign companies wanting to invest in the U.K., Deloitte said in “Investing in the UK: A guide for South African businesses”.
In 2015, Brait, the investment vehicle for South Africa’s richest billionaire, Christo Wiese, bought U.K. fashion retailer New Look in a $2.7 billion US deal.
Truworths acquired footwear business Office Retail Group for $363.8 million.
Steinhoff International recently entered a bidding war for British catalog retailer Argos and London-listed electrical retailer Darty.
Whistles CEO Jane Sheperdson bought a 20-percent stake in Whistles in 2008 and is credited with engineering its comeback.
Whistles has 49 stores in the UK and 76 concessions in shops including Selfridges, Harrods and Bloomingdales.
Foreign companies are becoming increasingly confident in their ability to finance and execute deals, according to Deloitte. “And foreign private equity acquirers, those who buy in to a company primarily as an investment rather than as an addition to their existing business, are becoming more established.”
Home Retail Group has received a £1.4bn rival bid for Argos after supermarket Sainsbury’s offered £1.3bn for the company.
The second takeover offer has come from South African retailer Steinhoff, which offered 175p per share.
Sainsbury’s has until 23 February to make a firm offer for Argos.
Home Retail Group said the board was reviewing the Steinhoff proposal and it would make a further announcement soon.
A spokesperson added: “Home Retail Group shareholders are advised to take no action at this time.”
Sainsbury’s second offer for Home Retail Group came after an offer of £1bn was rejected.
Steinhoff, which owns the furniture chain Harvey’s in the UK, makes most of its products in developing countries, and sells its furniture across Europe.
The South African retailer said its offer would not disrupt the sale of Homebase, which Home Retail Group is in the process of selling to Australian retail company Wesfarmers. The firm plans to bring its Bunnings chain to the UK.
Sainsbury’s, like other UK supermarkets, has faced intense competition from discount retailers such as Aldi and Lidl.
Chief executive Mike Coupe said if the takeover went ahead the combination of the two companies would create the UK’s “food and non-food retailer of choice”, with 2,000 stores.
The tie-up would create the UK’s largest general merchandise retail business.
Mr Coupe said that the merger would bring savings in the region of £120m – half of which would come from putting Argos stores into Sainsbury’s supermarkets.
Meanwhile Steinhoff has until the 18th March to make a firm offer.
“We chose this West Street location for its high volumes of foot traffic and for its positioning as a transport hub and gateway to one of Africa’s biggest economies,” said Krispy Kreme’s CEO, Gerry Thomas. “An international brand as recognisable as Krispy Kreme is what people expect to see when visiting a metropolis such as Sandton.”
Thomas further assured fans that the opening day will follow the festive trend of the Rosebank launch, with a ribbon cutting and enticing prizes up for grabs. Along with T-shirts for the first 100 customers in the queue, they will also stand a chance to win doughnuts for six or 12 months, depending on how close they are to the number four position. The die-hard fans who elbow their way to positions one to three will receive a dozen Krispy Kreme’s original glazed doughnuts every week for a year, six months and three months, respectively. Fans are encouraged to keep an eye on Krispy Kreme social media updates to know exactly when and where they need to be in order to stand a chance to win.
The Krispy Kreme brand, which is owned jointly by franchise companies Fournews and John and Gerry Brands, is set for rapid expansion over the next year. “Our aim is to open at least six more stores before the end of 2016 in Gauteng, with a long-term plan for 31 outlets across the country over the next five years,” continued Thomas. “With such a strong positive response to our first store, we look forward to being able share the joy of Krispy Kreme with many more stores in the months to come.”
LONG ROAD: At a results presentation on Wednesday, recently appointed Edcon CE Bernie Brookes outlines changes the heavily geared apparel retailer is making to bring customers back and streamline operations. Picture: MARTIN RHODES
LONG ROAD: At a results presentation on Wednesday, recently appointed Edcon CE Bernie Brookes outlines changes the heavily geared apparel retailer is making to bring customers back and streamline operations. Picture: MARTIN RHODES
This is the second round of job cuts at Edcon’s head office, following last February’s retrenchments, and the process is expected to be completed by March
EDCON, the retailer that owns brands such as Edgars, CNA and Jet, will cut jobs at its head office as part of its turnaround strategy.
“The process commenced on February 5 — it is still too early to have a final number at this stage; definitely not two-thirds of workforce. We anticipate that the process will only be concluded around March,” a spokesperson said.
Media reports claiming it would slash two-thirds of its 3,000 head office staff were “factually incorrect”, the company said. This is the second round of job cuts at its head office, following last February’s reduction.
Edcon was bought by Bain Capital for R25bn in 2007 in a deal that burdened the retail group with debt.
The company, under new CEO Bernie Brookes, was looking to take back market share through boosting store space productivity and reviving its high-margin private label brands such as Kelso at its ailing Edgars chain.
The job cuts will not affect stores.
AS A stock analyst with nearly two decades’ experience, Sasfin Bank’s Alec Abraham has seen a number of high-flying companies crash back to earth. In recent months, he became concerned about what he saw as an alarming shift in focus from the one-time darling of the clothing retail sector, Mr Price.
“For years, Mr Price’s philosophy was to provide designer fashion at an affordable price. It got them a prime slice of that higher income market, and it worked exceedingly well,” says Abraham.
He isn’t exaggerating: the company hit a sweet spot that few others were brave enough to try during the dark days of the late 1980s, when the economy was battling under PW Botha’s last kicks of grand apartheid.
At the time, founders Laurie Chiappini and Stewart Cohen had returned from a trip to the US with the plan to replicate the American cash-based factory shop idea — a somewhat radical proposition, as the dominant idea at the time was of a retail sector led by the likes of Edgars pushing credit.
In the end, what Chiappini and Cohen succeeded in doing was to launch one of SA’s great retail success stories. Shoppers flooded stores, seeking out Mr Price’s “on-trend” clothes which aimed to make “catwalk fashion accessible to customers at highly competitive prices”.
And investors made a killing. In the past decade alone, Mr Price’s stock has provided a total return, including dividends, of 513%. For those who invested R10,000 in 1989, they’d now have R4.5m.
Yet despite this fantastic start, Mr Price seems to have lost its lustre. Its harshest critics think the company has lost its mojo.
“It seems to me,” says Abraham, “that Mr Price’s merchandise has become more mainstream. Sure, they’ve got more of the young, emerging black middle class into their stores, but they’ve lost a little bit of their differentiation, and alienated their higher-income customers”.
Such a step down would be risky, exposing a retailer to customers who are more at the mercy of a faltering economy.
To add to the pressure, a number of hot-shot foreign retailers have opened shop here, among them the Australian brand Cotton On, Sweden’s H&M and Spain’s Zara. These have struck a chord with shoppers.
Predictably, Mr Price’s brass disagreed with Abraham’s view. Though the company says its philosophy hasn’t changed, there certainly appears to have been a shift on the store floor.
Shares in SA’s biggest retailers have tracked downwards in the past few months on expectations that weak economic growth and a rising interest rate cycle would curb consumer spending. The group’s last price peak was R201.78 in April.
The group owns brands including Foschini, Markham, Totalsports, @Home and American Swiss. Last January, it bought an 85% stake in UK women’s fashion chain Phase Eight. At end-September, it had 2,913 outlets in 31 countries including the 523 Phase Eight stores.
In a trading update, group CE Doug Murray said between 29 November and 26 December, group sales had risen 27.2% compared with a year ago. Excluding Phase Eight, turnover growth was 13.5%, and growth on a like-for-like basis, excluding new store openings, was 6.9%.
Other than at Phase Eight, its strongest category was clothing, where same-store sales jumped 9%, followed by cellphones, up 8.7%. The weakest categories were homewares, where same-store sales growth was a negative 2.9%, and jewellery at a negative 0.5%. In cosmetics, same-store growth was up 5.2%.
The group grew cash sales 20.8% last month and credit sales 7%. Total group sales in the nine months to 26 December rose 33% compared with the same period in 2014, or 11.6%, excluding Phase Eight.
On a same-store basis, sales were 5.8% higher.
The trends for the nine-month period were a little different from Christmas, as clothing and cosmetics were the strongest categories, followed by homewares and jewellery. Cash sales rose 17.3% over nine months and credit sales 7%.
In the nine-month period, merchandise inflation, excluding Phase Eight, was 7.5% on average, Murray said.
“Higher cash than credit sales growth continues to support our view that, although the credit market may be marginally improving, cash sales still have more legs,” Momentum SP Reid analyst Alex Sprules said.
Murray said sales had continued to be good, with same-store growth, excluding Phase Eight, rising 6.2% in the two weeks to 9 January.
MR PRICE’s shares declined 5.52% to R202.19 after a slowdown in its first-half sales growth failed to live up to its shareholders’ high expectations.
A senior analyst said the group had lost its “designer look for cheap” edge as it shifted its merchandise styling.
“Two years ago they moved styling mainstream to get more of the young black market. Mr Price became one of the many moving into that space — making them more cyclical due to their exposure to the lower market. They began to buckle when the economy started to go down because of this move,” Sasfin Securities’ Alec Abraham said.
Mr Price reported a 16.7% rise in net income to R1.08bn in the 26 weeks to September 26 — a deceleration from the 23% gain in the same period a year earlier. Revenue grew 9.2% to R9bn with retail sales increasing 8.6% to R8.6bn, with comparable store growth of only 4%.
In Wednesday’s results statement, CEO Stuart Bird blamed a high comparable base in the group’s apparel business, the timing of the Easter school holidays and the late onset of winter. “The economy is not in good shape and consumer confidence is understandably low.
“We were trading off an exceptional performance in the corresponding period last year … (where) Mr Price apparel grew sales by 20% and comparable sales by 15%. In so doing it created an extremely high base to beat in a softer trading environment,” he said.
The group’s gross profit margin of 40.1% was 1.3% lower than last year. The merchandise margin was hit by exchange rates and, to a lesser extent, higher markdowns, and fell 1.1% to 40.7% of retail sales.
Mr Abraham said had the retailer not moved “down-market” and away from the very robust “top end”, the group would have had a more resilient top-line performance.
“Five years ago, what made Mr Price so strong was that their clothes looked like designerwear, but cost you nothing. Their primary market was upper-income groups, the kind of person who had one or two R8,000-a-pair True Religion jeans and would mix it up with Mr Price pieces and it looked really good. At that point they were catering to a niche market.”
Mr Bird said: “The consumer environment could deteriorate further and we will still be up against a very challenging base in the second half of the year.”
Truworths said to acquire Office for 260 million pounds this week
It seems as if months of ongoing discussions are finally set to come to a head as South African retailer Truworths is to complete its acquisition of British footwear chain Office this week.
Truworths, which is listed on the Namibia and Johnannesburg stock exchanges, is expected to sign an agreement this week to finalize its purchase of Office. The clothing retailer is believed to be paying approximately 260 million pounds for the footwear chain, which is less than the 300 million pounds pricetag linked to Office before.
News of a potential sale to Truworths, which is interested in expanding its businesses outside of Africa, is said to have boosted the footwear chain annual sales.
Truworths said to acquire Office for 260 million pounds this week
The sale comes after Office’s owner, private equity firm Silverfleet Capital explored options for a potential stock listing. Silverfleet acquired Office in December 2010 from Scottish entrepreneur Sir Tom Hunter for an undisclosed sum. Under the helm of the company’s chairman Allan Leighton, Office has grown and expanded into new territories such as Germany.
More than 200 Joburgers camped out overnight for a first taste of the iconic U.S. Krispy Kreme doughnut — still warm and dripping glaze, fresh off the conveyor belt — at today’s opening of the first South African and African store, according to a report in EatOut.
Sixteen doughnut flavors will be on sale — the top 10 bestsellers in the world and six unique to the South African market, BusinessDayLive reports.
The Winston-Salem, North Carolina-based doughnut company and coffeehouse chain is licensed to open 31 Krispy Kreme shops in South Africa.
Customers got to watch the doughnuts being made at the new store in Johannesburg’s Rosebank Mall, which can produce up to 110 dozen doughnuts an hour. There’s also a Krispy Kreme factory in Sandton capable of making 270 dozen doughnuts an hour that will be a distribution hub for other Gauteng stores.
Eat Out critic Rupesh Kassen was there at 7 a.m. for the grand opening. Here’s how he described it: “For those eager to try this pillow of happiness you may have to contend with a few other die-hard fans. But fear not, the queues are worth the wait.”
Krispy Kreme has its eye on other African markets such as Ghana, Kenya and Nigeria but first it’s trying out South Africa, according to BusinessTech.
“Within five or six years we could be in five or six countries in Africa,” said Michael McGill, international vice president of Krispy Kreme. “This is the hottest new market in the world,” he told CNN Money.
Burger King re-entered the South African market in 2013, and was met with long lines of customers when it launched, as was Swedish clothing retailer, H&M, which opened in early November in Cape Town.
Starbucks plans a 2016 launch and Krispy Kreme competitor, Dunkin Donuts, also wants to open shop in South Africa, according to Business Tech.
The South African Krispy Kreme stores will be in malls.
“Our roll-out strategy is mall-based because the South African retail landscape is dictated by malls and that is where you mitigate your risk and you know you will get the right foot count coming into your stores,” said Gerry Thomas, CEO of Krispy Kreme Doughnuts South Africa, according to BusinessDayLive.
Krispy Kreme signed a licence agreement in May with Fournews and John & Gerry’s Brands. Fournews is a restaurant franchisor with brands including News Café, Moyo and Smooch, a frozen yogurt chain..
“Krispy Kreme is a strong emerging market brand in countries that have similar demographics to ours,” Thomas said. “There is also no one playing in the sweet treat space in South Africa.”
Listed on the New York Stock Exchange, Krispy kreme plans to open in Myanmar, Bangladesh, Cambodia and Guatemala, BusinessDayLive reports.
In the U.S., Krispy Kreme sells its products in grocery and convenience stores, in standalone stores, drive-throughs and kiosks.
U.S. marketing, executive and operational training teams have been in South Africa to help out with the Rosebank opening.
Krispy Kreme plans to import the “secret” doughnut mix but will get ingredients such as sugar, shortening, packaging and toppings locally.
Stores in KwaZulu-Natal and the Western Cape will open in 2017 and 2018, BusinessDayLive reports.
Krispy Kreme has more than 1,000 shops in 25 countries, according to a company press release.
Johannesburg – Swedish fashion retailer Hennes & Mauritz (H&M), Europe’s second-biggest clothing retailer, is hoping to give South African shoppers that good old quintessential shopping experience that puts everything around the customer.
After launching its first local shop at the V&A Waterfront in Cape Town on Friday, H&M now has its sights set on opening stores in Johannesburg, starting with Sandton City.
Par Darj, the country manager for H&M South Africa, told Business Report that the group would differentiate itself by focusing on what it did best, and that was being a traditional retailer.
He said H&M, popularly known for high-quality yet very easy and affordable fashion, represented what was known in-house as “democratic fashion”.
H&M’s vision is centred on being a retailer of “fashion and quality in a sustainable way”, said Darj, whose career at H&M has spanned major markets, including being country manager for the US between 1999 and 2001, and country controller for H&M England in the 1980s.
“In South Africa we see a very fashion oriented market… and there is a very big fashion interest, especially if you look at the middle class and the aspirational market,” he said in an interview on Friday.
He said even people who might not currently have the means to buy fashion represented an opportunity as H&M was about providing affordable, high-quality fashion for all. “We call it democratic fashion,” Darj added.
He said H&M’s core focus was selling fashion not running finance operations, hence it offered no store credit unlike a lot of other retailers.
“If you want to be a bank that is fine. We will focus on retail,” Darj said, noting that a lot of retailers have had their fingers burnt trying to be a bank and a retailer. “We don’t offer credit, but you can pay with your credit card,” he said.
Indeed, South African retailers are currently between a rock and a hard place as high consumer debt weighs on household spending and competition puts pressure on margins.
Darj said H&M’s foray into South Africa had already resulted in about 600 jobs in the run up to the opening of the V&A Waterfront and Sandton City stores. Darj said H&M planned to have as many as 1 500 people employed within 12 months.
“We would like to hire people with a good attitude and an interest in fashion,” he said, adding that some 60 associates had already been sent to Sweden for training.
In the long run, H&M planned to use South Africa as a springboard to the rest of southern Africa, as well as to east and west Africa. H&M was exploring the feasibility of opening a local manufacturing facility, Darj said.
“Last year we opened a production factory in Ethiopia. We are also producing from Turkey. We will see what is possible in South Africa,” he said.
H&M’s arrival caps a busy few months as South Africa’s large shopping centres have already been experiencing good demand for space from other top international brands including Zara, Burberry, Cotton On and Top Shop.
JP Verster, an analyst at 36One Asset Management, said on Friday that H&M would probably learn from the expansion strategies of its peers Zara and Cotton On.
“H&M will choose which expansion strategy to follow in South Africa. It can either choose from Zara, which had a cautious strategy of opening a handful of stores in South Africa, or Cotton On”, which had an aggressive strategy, Verster said.
H&M operates 3 500 stores in 57 countries. Egypt and Morocco have, so far, been the only two African countries where it operates. The Sandton City store is scheduled to open later this month.
Taste Holdings has revealed its long-term costs and strategy with launching Starbucks in South Africa – including when the first store will open, and how many of them there will be.
Taste announced in July 2015 that it had secured the rights to open full-format Starbucks stores in South Africa. It is the brand’s debut in Sub-Saharan Africa.
According to Taste, the first Starbucks will open up in “the first half of 2016”, and following the grand opening, 12 to 15 more stores will open over the next two years.
The group expects future store growth of 20 outlets per year.
Taste’s research into the market opportunity for the brand – considering costs – is for 150 to 200 stores in South Africa.
However, it will not stop there – Taste’s agreement with Starbucks has the group owning and operating the brand directly for the next 25 years, with certain rights for other African countries.
Taste has also revealed how much the Starbucks brand will cost to operate in the country.
The group lists first store opening, pre-opening marketing and market research and establishing IT and other infrastructure costs amounting to R29 million.
The next 12 to 15 stores will cost the group R108 million to set up – and subsequent outlets are pegged at between R3 million to R10 million.
This means that for a hypothetical 200 outlets, it could cost Taste as much as R2 billion.
However, the group expects the business to achieve Ebitda break-even during the second year of the first store opening, and has set a target ten-year internal rate of return at store level of 30%.
Taste announced that it intends to raise up to R226.3 million by way of a renounceable rights offer to finance its Starbucks plans, among others.From 2015 Copyright, BusinessTech. All right reserved.
Retail giant Woolworths has emerged as the company with the best reputation among South Africa’s largest companies in 2015.
According to the 2015 RepTrak Pulse reputation survey conducted by Reputation House, a representative of the internationally based Reputation Institute, Woolworths’ scored 71.2 points out of a possible 100.
The retailer retained its position from 2014, having overtaken mobile operator, Vodacom, as the company with the strongest reputation.
Reputation Institute’s (RI) National RepTrak Pulse survey ranks the largest listed companies by revenue and familiarity.
Pick n Pay and Shoprite scored 70.8 and 69.0 respectively, coming in second and third, while MTN and Mr Price rounded out the top five companies.
The 2015 edition of the RepTrak Pulse study measured the reputation of 30 well-known companies, included among these are the ten largest listed South African companies based on revenue.
Companies that are not easily recognisable by the general public, as well as those that are wholly owned subsidiaries of other companies were excluded, Reputation House said.
The scores of the 30 companies surveyed in the 2015:
# Company Score
1 Woolworths 71.2
2 Pick n Pay 70.8
3 Shoprite 69.0
4 MTN Group 67.5
5 Mr Price Group 66.3
6 First Rand (FNB) 65.7
7 Vodacom Group 64.8
8 Spar group 63.7
9 Standard Bank 62.2
10 Capitec Bank 62.1
11 Edcon Group 61.5
12 Truworths 61.2
13 Absa 60.4
14 Nedbank 59.9
15 Foschini Group 57.4
16 Shell 57.1
17 Telkom 56.4
18 Engen 55.7
19 SABMiller 55.4
20 Old Mutual 55.0
21 Caltex 53.6
22 Sasol 53.1
23 Liberty Holdings 52.8
24 Massmart Holdings 52.4
25 BP 52.4
26 Cell C 52.4
27 Sanlam 52.3
28 Total SA 51.5
29 Eskom 46.2
30 Santam 40.0
12 new companies featured on this list in 2015, from the 2014 ranking.
From a reputation point of view, Capitec Bank is becoming a serious contender in the banking sector. “We have a newcomer that is no longer seen as an outsider but from a reputation perspective is now playing in the big league”, said Dr Dominik Heil, chairman of the Reputation House.
“While there is an increase in the average reputation of the South African companies, we are seeing a similar picture that we typically see when there is a crisis and uncertainty in an economy,” said Dr Heil.
“The fact that people are under a lot of pressure economically and given the lack of visible leadership in the public and private sector, people’s attention has shifted towards basics such as pricing, quality of products and value for money.”
The 2015 RepTrak®Pulse was conducted in May and June 2015. 10,547 people between the ages of 18 and 64 from economically active segments of the public i.e. with an LSM of 6+, were surveyed.
At least 300 respondents were interviewed about each company included in the survey.
Truworths International Ltd. started talks to buy Office Retail Group Ltd. in the latest international offensive by a South African retailer.
A purchase of the U.K. fashion footwear chain from owner Silverfleet Capital would add to a list of overseas takeovers by South African companies, including this year’s $1.2 billion acquisition of British fashion retailer New Look by Brait SE. No binding offer for the 150-store Office chain has been made, Cape Town-based Truworths said in a statement Monday.
South African shopping chains have been struggling to grow sales at home as unemployment of more than 26 percent, power shortages and rising inflation stifles consumer spending. Those expanding abroad are benefiting from diversifying their sources of revenue beyond the rand, which has weakened 15 percent against the dollar this year.
Last year, Woolworths Holdings Ltd. bought Australian chain David Jones Ltd. for about $2 billion. In January, The Foschini Group Ltd. agreed to buy U.K. clothing chain Phase Eight for $212 million. Truworths, which has acquired two South African children’s clothing companies this year, had cash and cash equivalents of 1.5 billion rand ($111 million) as of June 28.
“It looks like it may be an expensive deal at a peak exchange rate, so the timing doesn’t appear as attractive as their peers,” said Kyle Rollinson, an analyst at Avior Capital Markets in Johannesburg. “The South African business could still face pressure for the next 18 months and the cash Truworths has was a buffer for the weak local environment.”
Truworths approached Office’s management to discuss the 300 million-pound ($464 million) bid, the London-based Sunday Times reported on Sept. 13, without saying where it got the information. Retail Office offers mens, womens and sports footwear at the mid-level price range, Truworths said.
The shares climbed as much as 5.3 percent and traded 2.1 percent higher at 88.04 rand as of 3:26 p.m. in Johannesburg.
Truworths is in the process of changing leadership, with Chief Executive Officer Michael Mark leaving after more than 23 years at the company. He will be succeeded by Jean-Christophe Garbino, formerly of Kiabi Europe SAS. Mark, at the request of the board, is working on a month to month basis “until the transition period has been suitably completed,” Truworths said Aug. 20.
GLOBAL doughnut company and coffee retailer Krispy Kreme on Wednesday said its first store in SA will be opened in Rosebank, Johannesburg, at the end of November.
In May, the company signed a development agreement with local company Krispy Kreme Doughnuts SA to open 31 Krispy Kreme shops in the country over the next five years. This marks the company’s first venture into Africa.
A more brand-aware middle class with rising incomes are attracting other US consumer-facing giants such as Starbucks and Dunkin’ Brands who will also be expanding into the country.
The Krispy Kreme store will have an option of 16 Krispy Kreme doughnuts, as well as a wide variety of locally roasted coffee flavours.
Krispy Kreme has been serving its customers since 1937. Its footprint now extends to 1,000 shops in 24 countries.
The company is listed on the New York Stock Exchange.
Johannesburg – Mr Price Group shares fell the most in almost three years after the clothing and household-goods retailer said low levels of consumer confidence, “some poor fashion calls”, and a relatively late winter curbed sales.
The stock dropped as much as 10%, the biggest intraday decline since September 2012, and traded 8.7% lower at R217.88 as of 14:52 on the JSE.
The shares are 7.5% lower this year, valuing the company at R58bn.
South African consumer confidence dropped to a 14-year low in the second quarter of this year as unemployment of 25%, power cuts and rising fuel prices put pressure on shoppers.
Total sales rose 9% in the 21 weeks through August 22, with same-store sales advancing 4.6%, the Durban-based company said in a statement on Tuesday.
Revenue gained 16% in the comparable period a year ago. “Disappointing sales growth for April and May” hurt overall performance, Mr Price said.
“Opportunities in the current trading period were lost in the mens’ and ladies’ junior businesses,” the retailer said. “Despite this, good growth was achieved in most other parts of the business.”From Fin24.com
The South African billionaire who has recently snapped up Virgin Active, the gym chain, and New Look, the high-street retailer, is now training his sights on Britain’s struggling supermarket industry, it can be revealed.
Christo Wiese, who has an estimated £4.2bn fortune, said there were parallels between the grocery sector in his home country, where he has built up the ShopRite empire into the continent’s largest food retailer, and the highly competitive UK market.
All the big players in the UK are reeling from an intense price war and a change in shopping habits. Analysts have said that this tough environment makes it unlikely that the food sector will attract new investment.
But 73-year-old Mr Wiese, who owns a 19pc stake in Iceland, the frozen food chain, and has been linked with a potential takeover of Morrisons, brushed off such concerns and suggested his investment firm, Brait, could be making its next venture in the UK’s supermarket sector.
“The UK is extremely competitive but I can assure you it is as competitive in South Africa, if not more,” he told The Telegraph. “We South Africans find it very easy to do business in the UK; it is similar, and it has the same challenges.”
Billionare businessman Christo Wiese speaks from his desk on June 12, 2012 in Johannesburg, South AfricaChristo Wiese Photo: Getty
Mr Wiese bought Sir Richard Branson’s Virgin Active in a £682m deal and New Look for £1.9bn in a two-month bout of deal-making between April and June this year. The billionaire is also launching a new UK fashion chain, called Pep & Co, specialising in discount fashion and childrenswear. Mr Wiese started ShopRite in 1979 with just eight stores in Cape Town, but the company now owns more than 2,000 supermarkets, furniture shops and food outlets in 15 countries, with sales in South Africa of £2.2bn.
The entrepreneur said that he would be prepared to overlook some of Brait’s strict investment criteria if there was the right opportunity in the grocery sector. “I’ve always explained that any business we look at has to tick certain boxes – facing the cash consumer, strong management with a proven track record and with skin in the game, great growth potential both nationally and internationally and hugely cash generative.”
He added: “If Shoprite perceives the right opportunity they will certainly pursue it.
In an aside, which could also be read as a warning to Tesco and Sainsbury’s should Brait make a move, Mr Wiese said: “We have to compete with all the beasts in the world, there’s no hiding, and if you don’t want to compete you mustn’t get in the arena.”
Mr Wiese has expressed a fondness for the discount sector, with Pep & Co also selling T-shirts from £2.
Mr Wiese, who will be inducted into the World Retail Congress’s Hall of Fame at a ceremony next week, also denied that he had ever been interested in taking over the department store chain BHS before it was sold for £1 by Sir Philip Green to Retail Acquisitions.
The Foschini Group has launched the first entirely tween-focused brand in South Africa, Soda Bloc. The new fashion brand aims to kit out fashionistas aged 9 to 16 in clothing, accessories and footwear to suit their lifestyles…
TFG launches tween-focused clothing brand”Soda Bloc inspires tweens to be youths: be fun, be different, be informed, be the future, be cool, and be yourself. Created for older children, but with their parents best interests at heart, Soda Bloc collections are fashionable and fun loving, but relevant for the age group,” said Alex Harris, Head of Soda Bloc.
Expect casual cool in hoodies, track pants, sneakers, tees with prints and quirky slogans like: ‘My favourite days are days when everyone is really happy’, ‘Good vibes only’,and ‘Being nice makes you cool’.
TFG will open 11 Soda Bloc stores across the country before the end of 2015, with further stores opening in South Africa and Africa in 2016. The first Soda Bloc stores to open in August include the Liberty Promenade and Tygervalley Shopping Centre’s in Cape Town, Sandton City in Joburg, and Hemingways Mall in East London.
September store openings will take place at Bay West Mall in Port Elizabeth, the Mall of the South in Joburg and the Mall of the North in Pretoria, whilst further stores will open in Joburg (Clearwater Mall, Greenstone Shopping Centre and Eloff Street) and Pretoria (Middleburg Mall) in October and November.
“We saw an opportunity to fill a gap in the market and took it! We are very excited to launch Soda Bloc to South African consumers. Our goal is to provide fashion that’s on-trend and affordable to a broad audience,” said Harris.
The Clicks Group is pleased to bring Claire’s, one of the world’s leading specialty retailers of fashionable jewellery and accessories for young women, teens, tweens, and kids, to South Africa.
Known as the number 1 ear piercer in the world, having pierced over 90 million ears globally, and with over 50 years of fashion accessories retailing experience, Claire’s is the go-to destination for all the latest, hottest trends in jewellery, hair accessories, and cosmetics.
“Claire’s is the perfect brand fit for Clicks,” says Alex Anson-Esparza, Merchandise and Marketing Executive at Clicks. “Claire’s speaks to our youth market and extends our fashion and hair accessories offering. It provides an interesting and fun store experience in a ‘treasure hunt’ setting that encourages customers to explore and find the perfect buys for herself and her bestie.”
Claire’s inspires fashion creativity and provides inspirational products that accommodate and reflect all personalities, moods, and attitudes. From babies to young adults, Claire’s offers a wide range of jewellery, beauty must-haves, and hair- and fashion- accessories. Claire’s also connects with its customers during important personal milestones – be it a first ear piercing, a first day at school, a first date, or a first job.
The first Claire’s store is located at Shop F66, Upper Level, Cavendish Square, Claremont, in Cape Town. Pop in between 18 and 31 July, and enjoy the launch offer of 10% off all merchandise. As of September 2015, the Claire’s range will be available within 80 selected Clicks stores nationwide.
PICK n Pay plans to employ 5,000 people a year as it opens new stores in Africa’s most advanced economy, the retailer said on Monday.
Pick n Pay, which opened about 100 grocery stores last year despite subdued retail sales and gross domestic product growth of 2%, is aiming for “a bit more this year”, CE Richard Brasher said.
Pick n Pay employs about 36,000 staff.
“Most of these jobs will be in our new stores,” Mr Brasher, a former UK head of Tesco, told Reuters.
Bigger rival, and market leader, Shoprite said in February it had employed almost 7,000 more people in the six months through December in several new outlets.
Shoprite also said it plans to open 91 new supermarkets in SA in the next 18 months.
Pick n Pay has lost ground to Shoprite and other rivals in the last few years after failing to invest in new stores and paying out much of its profit as dividends.
Stanlib chief economist Kevin Lings said the retail sector was still employing people while the rest of the economy was feeling the crunch, reflecting the length of time it takes to build and open stores.
“You will start to see losses as expansion continues and the market reaches saturation,” he said, adding that the smaller, independent retailers will suffer first.
SA’s government is desperate to create jobs in a nation where the unemployment rate stands at about 25%.
Mining firms Lonmin and Kumba Iron Ore warned last week that thousands of jobs could be shed as commodity prices hover around their lowest levels this decade.
Steelmaker Evraz Highveld Steel and Vanadium said last week it had halted its operations in the country, while ArcelorMittal SA has asked the government to raise duties on cheap steel imports from China or risk the closure of a plant that employs 11,000 people.
South African health-and-beauty retail chain Clicks has announced a partnership with South African digital signage solutions company Moving Tactics that entails installing digital signage within the chain’s top 25 stores nationally, as well as marketing the media platform to Clicks’ private-label suppliers and other brand suppliers.
Moving Tactics has installed more than 500 in-store digital signage screens that reach an audience of 2 million customers per month via a bespoke multichannel digital signage network, the company said. The network’s strategic focus is on building a new media platform that will inform and benefit the shopping experience for its customers whilst enhancing the look and feel of its stores.
Moving Tactics’ content management will support Clicks’ promotions strategy to provide customers with the latest on-point seasonal service and product promotions and provide a wide variety of suppliers, large and small, with an equal media voice in-store at point-of-purchase, the companies said.
The Shopper Journey through Clicks’ store environment is initiated and supported by a 65-inch LG commercial display built into the window of each store, providing the potential customer or passer-by with a view of current promotions, supplier advertising and seasonal campaigns. As the customer enters the store they are directed through the beauty department, where Moving Tactics has built four LG 42-inch extended displays in series, which allows content to flow across all four screens specifically for the cosmetic and fragrance brands. In certain stores, four-screen video walls have been installed in the engagement zone to bolster in-store activity alongside any cosmetic or beauty promotions.
Moving further into the store, a group of dual LG 42-inch extended displays have been placed at various FMCG areas in-store, ranging from hair care, baby, appliances, personal care and health. These dual displays work in a similar fashion to the quad extended displays in the beauty department, but are focused on campaigns, promotions and supplier advertising specific to the area.
As customers complete their shopping experience, they proceed to the point-of-sale area, where Moving Tactics once again has utilized the extended dual-screen solution, installing two units per store. One of the capabilities of the first unit is that it incorporates the queue management system, in which the visual prompt has been built into the visuals on the screen. This allows the customers’ attention to be focused on the digital signage and not to be distracted by another solution, the companies said.
“We are focused on providing our Clicks customers with the right message at the right time in the right place so as to make their purchase decisions easier and more effective,” said Hugo van der Westhuizen, Clicks advertising and media sales, in the announcement.
Moving Tactics managing director Chris Day said, “We are very excited to become an innovation partner that not only provides a technology base but also optimizes their in-store marketing and promotions space and leverages off this infrastructure to enhance the customer journey through the store.”
Pep & Co, the new value fashion retailer by ex-Asda boss Andy Bond opened its first store in Kettering yesterday.
Nearly 10 years ago Bond created Asda’s fashion line George and according to him, there is still room in the market for another player.
He’s aiming to appeal to yummy mummies with mainstream clothes, and will also stock childrenswear and some homeware. Yesterday’s new store opening attracted a queue of around 100, mostly young mothers accompanied by prams no less.
“This is just one store on one day,” said Adrian Mountford, Pep & Co MD and a former Sainsbury’s and Matalan executive. “So in some ways it doesn’t mean a lot. But it would have meant a lot if there was no one here.”
Bond is embarking on an aggressive store opening programme, which will see an additional 50 stores pop up by the end of August.
“Everyone we talk to wants to call us mad for trying,” said Bond. “But that bloke that said the world was not flat, he was thought a bit mad at the time.”
Swedish clothing brand H&M will be the next international label to open at Sandton City. Hennes & Mauritz (H&M) is known for its fast fashion for men, women, teenagers and children…
Founded in 1947 in Västerås, Sweden, H&M is now the second-largest global clothing retailer (behind Spanish company Inditex, parent company of Zara), with more than 3000 stores in 59 countries.
H&M’s flagship store, which will be approximately 3000m² in size, will open at the end of November. H&M’s only other stores on the African continent are in Egypt and Morocco.
You can finally buy H&M clothes without a plane ticket or a friend bringing them back from London.
Despite living at the tip of Africa, we are still able to look internationally fabulous, not just thanks to our wonderful local designers, but also since big brands are being imported and available for our shopping pleasure.
Zara, Top Shop, Forever 21, River Island… Once these brands were just a distant dream, but now they are available throughout the country, and the list just got better.
We all heard the rumours, but now there is tangible evidence that proves it is true. According to Womenstuff, the very first South African H&M store will be opening in Sandton City shopping mall.
Sandton City took to their Facebook page to announce the big news, stating that the flagship store will be open in November, just in time for Christmas shopping.
H&M is a Swedish multinational retail clothing company and is the second largest global clothing retailer. Now we no longer have to shop for H&M clothes online, pay exorbitant shipping costs and wait weeks to get our items.
Now if only Selfridges, J crew and Barneys will find their way here, we will be in shopping heaven.
IOL Business – May 25th, 09:23
Mr Price Group extended gains after the clothing, furniture and linen retailer declared a dividend that beat estimates and said profit had climbed 21 percent.
The retailer had increased the dividend by 20 percent to R5.80 a share, the Durban-based company said in a statement on Friday. That compares with the R5.79 median estimate of 13 analysts surveyed. Earnings per share adjusted for one-time items rose to R8.65 in the year to March 28.
That compares with the R8.69 median estimate of 14 analysts surveyed. The stock increased by 0.91 percent to R247.25 at the close of the JSE on Friday.
Mr Price remains the worst performer on the 10-member FTSE/JSE Africa general retailers’ index, which has rallied 20 percent this year.
Mothercare halves losses as chief executive Newton-Jones’s turnaround plan takes effect
Mothercare said it halved its losses for the full year as a result of new chief executive Mark Newton-Jones’s turnaround plan.
The pregnancy and children’s product retailer reported a loss of £13.1m ($20.54m, €18.44m), less than half of last year’s £26.3m.
Newton-Jones joined the company permanently in July 2014 after working as interim chief executive. He was hired to change the company’s structure after it had undergone severe losses.
In its report on the year ending 28 March 2015, Mothercare reported a 2% rise in UK and a 5.6% rise in international like-for-like sales.
“This has been an eventful year for Mothercare, but one in which we have started to make significant progress towards putting our UK business on a firmer footing and further developing our international business for continued long-term growth,” Newton-Jones said.
After Newton-Jones’s appointment as interim CEO in March 2014, the company received two takeover proposals from Destination Maternity, a US-based rival retailer, but the companies failed to reach an agreement on a potential deal.
The retail has closed 31 loss-making Mothercare stores in the UK, 13.5% of its UK total.
In an effort to branch out internationally, the company opened four stores in South Korea and is planning on closing stores in South Africa, while branching out in other countries, such as Russia.
“We are continually looking for ways to maximise the potential and quality of our international business, which includes entering new markets, opening new stores, extending existing stores and closing underperforming stores where appropriate,” the company said.
MR PRICE Group is likely to buck the retail sector gloom when the group’s full-year results are released on Friday.
The firm is expecting headline earnings per share of between 902.8c and 933.4c from 765.1c last year.
Rising living costs and household indebtedness are weighing on spending with constrained consumers increasingly searching for value.
Mr Price, thanks to its core apparel brand has consistently gained market share from Truworths, The Foschini Group and Edgars as their budget-conscious offerings continue to appeal to shoppers.
For the 52 weeks to March 28, Durban-based Mr Price is eyeing diluted headline earning per share of between 843.8c and 872.4c, from last year’s 715.1c.
Sasfin Securities senior retail analyst Alec Abraham said: “I’m expecting around 850.8c. Their guidance speaks for itself an increase of around 20% is a good kind of number to be getting in this kind of environment.”
“Mr Price is a very good discount operator, I think they will certainly be better than the rest (peers). Also, they continue to benefit from consumers buying down,” he said.
Over the past few years the company has geared itself towards a younger fashion oriented market through social media initiatives and tie-ups with local designers, much like Swedish brand H&M. Mr Price’s online offering, launched in 2012, now ships to more than 130 countries.
An online presence is key to entering new markets, especially where space is a constraint or rentals are high — this is especially the case in many African countries.
Performance from the group’s other chains such as Sheet Street, Mr Price Home and Miladys has proved a mixed bag over the last year.
Sheet Street’s LSM (living standards measure) 5-8 target customer has been more affected by the economic environment, which has seen shoppers shying away from buying bigger ticket items such as furniture.
At Miladys, incorrect merchandise calls and moves towards quick response fashion are affecting sales in the more traditional category.
The Cotton On Group looks set to expand to Namibia
19 May 2015 08:47Marketing News
Australian retailer The Cotton On Group, continues to be one of the fastest growing fashion retailers globally, expanding its African footprint by opening its first store in Namibia on Friday, 29 May in Windhoek’s The Grove Mall.
Born to deliver on-trend, effortlessly cool and affordable fashion, Cotton On provides men and women the styles they want now, at the best price. At 1000m², the new Cotton On store at The Grove Mall is the first other African country to house the retailer, outside of South Africa. The new store will house a numberof brands under the Cotton On Group stable, including Cotton On, Cotton On Body, Cotton On Kids and RUBI Shoes.
With many global fashion retailers making the move from South Africa into the Namibian market and seeing great success, it was an obvious move from the Australian retailer as its first move into Sub-Saharan Africa.
“We have been very fortunate to have seen consistent growth and success in South Africa, with 120 stores and plan to continue to expand our South African fleet. We constantly look at potential new regions where we will expand the Cotton On brand, and as Namibia borders South Africa, the Namibian retail market shares many similarities to that of its neighbour,” explains Cotton On Global general manager, Felicty McGahan.
“After seeing some of our competitors experience strong performance in the Namibian market, we felt it was the right decision for the Group to move into its second African country,” says McGahan.
The Grove was only recently developed, offering a superior shopping experience for the customers that did not previously exist in the market, which made it the perfect location for Cotton On to launch into the region.
“With the introduction of The Grove Mall in Windhoek, it provided us an opportunity to introduce Cotton On to a new community and export our laidback, quintessential Australian lifestyle to Namibians,” says McGahan.
Since opening their first store in 1991 in Australia, The Cotton On Group has seen rapid growth and now has over 1300 stores across 17 countries, with a commitment to reach more people across the globe.
The new Cotton On store will open its doors on Friday, 29 May at 09:00 and to celebrate the launch, fun activity is planned instore over the opening weekend. On Saturday, 30 May, Radiowave will be broadcasting live in the morning, fashion stylists will be on-hand, a pamper station, coffees, kids activity, giveaways and more. Plus, the first 100 shoppers will receive a free gift with any purchase.
Cotton On, The Grove Mall Namibia, will trade Mondays to Saturdays from 09:00 to 19:00 and on Sundays from 09:00 to 17:00. It is located at Shop 524 on the corner of Chasie and Frankie Fredericks Road, Klein Kuppe, Windhoek, Namibia.
”Diamond Walk”, the new development within the Sandton City complex in Johannesburg has attracted new luxury store openings by major international brands. Prada, Dolce&Gabbana, Burberry, Giorgio Armani and Louis Vuitton have already opened their stores on the Diamond Walk at Sandton. Future store openings include: Ermenegildo Zegna, Billionaire Italian Couture, Jimmy Choo and Tod’s.
Sandton City’s Diamond Walk can be found in a spectacular new mall where Sandton City’s upper level links with the Sandton Sun and InterContinental Johannesburg Sandton Towers hotels.
Krispy Kreme to Expand its Presence to Africa By Opening 31 Shops in South Africa Over the Next Five Years
WINSTON-SALEM, N.C.–(BUSINESS WIRE)–
Krispy Kreme (KKD) today announced it has signed a development agreement with KK Doughnuts SA (Pty) Ltd., to open 31 Krispy Kreme shops in South Africa over the next five years. This marks the company’s first venture into Africa.
“From Asia to the Middle East to now Africa, the global demand for Krispy Kreme and its signature sweet treats continues to grow,” said Dan Beem, Krispy Kreme’s Senior Vice President and President – International. “We’ve partnered with outstanding operators who have vast experience in foodservice throughout South Africa. We’re confident Krispy Kreme will establish itself as the country’s premiere sweet treats provider under their leadership.”
Fournews Developments (Pty) Ltd., and John & Gerry’s Brands (Pty) Ltd., are the principal owners of KK Doughnuts SA. Majority owner, Fournews Developments, currently operates six other brands throughout South Africa such as Café Fino, Newscafe and Smooch frozen yogurt.
“Krispy Kreme is an iconic global brand that fits very well within our portfolio of brands,” said Nick Eleftheriadis, Executive Director, Marketing. “The South African consumer is looking for quality and value, which is exactly what Krispy Kreme delivers. We’re confident Krispy Kreme will quickly become a favorite of South Africans.”
Krispy Kreme’s Original Glazed® doughnuts, great tasting coffee, and other assorted sweet treats can be found in more than 1,000 shops in 24 countries.
About Krispy Kreme
Krispy Kreme is a global retailer of premium-quality sweet treats, including its signature Original Glazed® doughnut. Headquartered in Winston-Salem, N.C., the company has offered the highest-quality doughnuts and great-tasting coffee since it was founded in 1937. Krispy Kreme is proud of its Fundraising program, which for decades has helped non-profit organizations raise millions of dollars in needed funds. Krispy Kreme has more than 1,000 retail shops in 24 countries. Krispy Kreme is listed on the New York Stock Exchange (KKD). For more information about Krispy Kreme visit www.KrispyKreme.com. Also visit us on Facebook at www.Facebook.com/KrispyKreme, on Twitter at www.Twitter.com/KrispyKreme, and on Instagram at www.Instagram.com/KrispyKreme.
Information contained in this press release, other than historical information, should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s beliefs, assumptions and expectations of our future economic performance, considering the information currently available to management. These statements are not statements of historical fact.
Forward-looking statements involve risks and uncertainties that may cause our actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements. The words “believe,” “may,” “forecast,” “could,” “will,” “should,” “would,” “anticipate,” “estimate,” “expect,” “intend,” “objective,” “seek,” “strive” or similar words, or the negative of these words, identify forward-looking statements. Factors that could contribute to these differences include, but are not limited to: the quality of Company and franchise store operations; our ability, and our dependence on the ability of our franchisees, to execute on our and their business plans; our relationships with our franchisees; our ability to implement our international growth strategy; our ability to implement our domestic small shop operating model; political, economic, currency and other risks associated with our international operations; the price and availability of raw materials needed to produce doughnut mixes and other ingredients, and the price of motor fuel; our relationships with wholesale customers; our ability to protect our trademarks and trade secrets; changes in customer preferences and perceptions; risks associated with competition; risks related to the food service industry, including food safety and protection of personal information; compliance with government regulations relating to food products and franchising; increased costs or other effects of new government regulations relating to healthcare benefits; and risks associated with implementation of new technology platforms.
These and other risks and uncertainties, which are described in more detail in the Company’s most recent Annual Report on Form 10-K and other reports and statements filed with the United States Securities and Exchange Commission, are difficult to predict, involve uncertainties that may materially affect actual results and may be beyond the Company’s control, and could cause actual results, performance or achievements to be materially different from those expressed or implied by any of these forward-looking statements. New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the impact of each such factor on the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.
The Prada fashion house has opened its first store in South Africa. The brand now occupies an 8,611-square-foot retail space in the new luxury wing of the Sandton City mall in Johannesburg, which is called the Diamond Walk.
“The new opening in Johannesburg, one of the most interesting cities in Africa from a cultural and commercial point of view, is part of a strategic plan which aims to strengthen the retail channel in the African market,” a representative for Prada told WWD.
“With this opening, the Prada Group is increasing its presence in Africa, where it is already present with stores in Morocco,” the brand rep continued. “We are confident that the Prada store in Johannesburg will be a reference point both for the South African clientele and for the many international visitors of the city.”
The store will sell Prada’s men’s and women’s ready-to-wear, leather goods, accessories and footwear. The location was designed by architect Roberto Baciocchi, and features green fabric-lined walls, fine crystal tables, velvet sofas, a black marble chest of drawers and Prada’s trademark black-and-white floors.
“We harnessed the allure of luxury and sophistication, and approached the luxury and superluxury brands that best complement the center’s existing range of brands,” Alex Phakathi, a fund manager at the Liberty Property Portfolio — which owns the Sandton City mall — told WWD.
Prada also hosted a party to celebrate the South African store opening. DJ Misty Rabbit aka Mimi Xu had guests — which included Pabi Moloi, Lalla Hirayama, Miss Africa 2015 Liesl Laurie and rapper Da L.E.S. — dancing at the event.
Online shopping in South Africa was birthed in 1996, but e-commerce is only forecast to reach 1% of total local retail sales in 2016.
This is according to the managing director of research company World Wide Worx, Arthur Goldstuck, who was speaking at an event hosted by digital marketing initiative Heavy Chef in Johannesburg on Wednesday night.
Goldstuck said that local e-commerce sales are set to top R9 billion in 2016.
This is expected to be 1.03% of total retail sales in the country in that year, a milestone for SA’s e-commerce space.
Goldstuck further said that online retail is expected to grow 26% year-on-year in 2015 to reach a market size of R7.5 billion. The country’s total retail market size is forecast to be R807bn this year.
“For now things look great from a point of view of growth rate, but at the same time in terms of what it represents of the overall retail space, you have to understand that online retail is still in baby’s shoes,” Goldstuck told the audience.
Goldstuck noted that overall retail growth in SA has average around 7% per year, close to the global figure of 6%. However, he said that inflation eats into total retail sales and that the traditional brick and mortar market still has a stronghold over the online sales space.
“And that’s the backdrop of the online retail scene, because online retail is always going to be a subset of traditional retail,” he said.
Nevertheless, growing local internet user numbers, which are forecast to surpass 18 million this year, along with smartphone usage topping 23.5 million in 2015 are among factors driving greater local e-commerce adoption.
Unpacking the country’s e-commerce figures further, Goldstuck said the total number of online shoppers in SA at the end of 2014 amounted to 3.225 million.
He added that 60.8% of those ready to e-shop are doing so. Meanwhile, online shoppers aged 25-34 make up the biggest percentage of e-buyers at 16.3% followed closely by those aged 35-44 (15.6%).
Goldstuck also said that males make up 14.5% of e-commerce purchases in SA and females 13.1%. Couples that are married or living together are 13.2% of the local online buying population while those who are divorced or separate are the biggest segment of e-buyers at 18.9%.
Among the biggest categories of online purchases by adults are music and videos (3.6%), business purchases (3.6%), gifts (2.8%), clothing (2.6%) and software (2.4%).
Concluding his talk, Goldstuck said there are three essential rules that e-tailers in SA and the rest of Africa need to consider.
“Number one, the segmentation is more important online than offline,” said Goldstuck.
“It’s more important online because every user has a different motive and different fear when they go online,” he said, highlighting that fears still exist regarding the security of shopping on the internet.
The other two key points are that conversion is key.
“So, you have 5.2 million people that are ready to shop but only 3.2 million are actually shopping.
“And the third one, finally, confidence is actually the currency of online retail. And if you don’t instill confidence in your shopper, you’re actually undermining a key value of your own currency,” said Goldstuck.
Johannesburg – Pepkor, the clothing retailer bought by Steinhoff International Holdings for R68.4bn ($5.7bn) in 2014, plans to double its presence in Nigeria with 10 store openings per year through 2018.
The company opened its first outlet in Africa’s most populous country in 2012 and will have 31 stores by July, Deon Conradie, Pepkor Nigeria’s general manager, said in an interview on April 27 in his office in Lagos, the commercial capital. The clothing and footwear chain plans to sustain that growth rate over the next three years, he said.
“Our prices are low and we cater for that middle-to- bottom market, which is the fastest growing,’’ Conradie said. “There’s a need for somebody to supply that market.”
Nigerian demand for goods other than food is expected to increase to $110bn in 2030 from $20bn two years ago as Africa’s biggest economy grows and its working and middle classes seek alternatives to outdoor markets, according to McKinsey & Co. While a 40% fall in oil prices since June has curbed growth in the continents biggest crude producer, the economy is forecast to expand 5% in 2016, the International Monetary Fund said on April 28.
Entry to the Nigerian market requires relatively high capital investment due to inflated rental and power costs, according to Conradie. Woolworths Holdings [JSE:WHL], which targets wealthier consumers, said in 2013 it would close its three Nigerian stores because of costs and difficulties with getting products to shops.
“I think anyone coming into the market who wants to have stand-alone stores is going to pay some expensive school fees,” said Conradie, adding that new mall developments by companies including Johannesburg-based Resilient Property Income Fund may lead to reduced costs. “It can sometimes take three to four years to be profitable in these environments,” said Conradie, who has also worked in Angola.
Steinhoff [JSE:SHF], a Johannesburg-based furniture retailer, agreed to buy Pepkor in November to expand into clothing and new countries. The deal, the largest purchase of a South African company in more than a decade, will create a retailer spanning three continents. Steinhoff shares have gained 29% this year, compared with the 10% increase of the FTSE/JSE Africa All-Share Index.
The increased size of Pepkor will allow it to buy more products for Nigerian stores in bulk, a way to keep prices low in a country where shoppers are used to bargaining in markets, Conradie said. The company is also attracting customers by allowing monthly payments for certain goods and is considering electricity and television-subscription payment services in its stores.From Fin24.com
|Spur Ethopia: Neway, Teodros, Pierre, Ronel, Derick, Yonas and Mulugeta.|
Pierre van Tonder, CEO Spur Corporation in South Africa, explains why Ethiopia is such an attractive investment opportunity: “Ethiopia is a dynamic, productive country with one of the highest GDP growth rates in Africa. It holds many opportunities for entrepreneurs like our new partners. Spur International plans to have 100 restaurants in Africa outside of South Africa within five years, so it makes sense for us to have a presence in one of Africa’s fastest-growing economies. We currently have 39 restaurants in 12 African countries north of South Africa, and we will soon be opening another two in Arusha, Tanzania; as well as one in Kenya and one in Zambia.”
The Ethiopian economy has registered double-digit GDP growth rates since 2002. This substantial economic growth has stimulated a large and aspirant middle class with a demand for world standard restaurants. The many foreign nationals living in Addis Ababa, which is home to the African Union, UNECA (United Nations Economic Commission for Africa), several NGOs and other international organisations, as well as over 110 diplomatic missions match this demand. Ethiopian Airlines, considered the biggest, fastest growing and best performing African airline, uses Addis Ababa as its hub for international flights.
All combine to create and maintain a significant and growing market for high quality restaurants. At present, the only international eateries are offered by a few branded hotels. There are no international franchises in the country; the Spur Steak Ranch at Abyssinia Plaza will be the first.
Mulugeta Demissie, MD of Cucina Trading, is upbeat about bringing the quality brands of Spur International to Ethiopia. “We’re secure in our decision to work with Spur International. Its mission to provide outstanding food and excellent service synchronises perfectly with our vision to raise the standards of the hospitality industry in our country and beyond. So much so, that an Area Development Agreement for the Territory of Ethiopia has also been signed. We are very excited about introducing a new eating experience to both the local and international community living here. This agreement confirms Cucina’s commitment to open at least seven outlets in the next seven years.”
He is confident the Spur and Panarottis brands will work well within the history and culture of Ethiopia. Eating meat is a widespread and popular tradition throughout the country; and their long-standing diplomatic relationship with Italy has engendered a taste for Italian cuisine in the country, particularly amongst the youth and the middle-income demographic.
Cucina will initially create 60 new jobs in Addis Ababa. No doubt, the knowledge transfer and being the first international specialty brand franchise in the country will pave the way for others. The confidence from international travellers recognising an outstanding brand and the ability to provide consistent high-quality products and services should inspire other local business to meet excellent standards of hygiene and service. The Spur concept of a kids play facility will also be a first in Ethiopia.
The company behind the Eastern Cape’s largest regional shopping centre promises a mix of big fashion, food and fun when it opens its doors on 21 May 2015.
Introducing her new team of 23 dedicated staff members, Baywest Mall general manager Sonja de Necker last week said 96% of the 90000m² mall had been let, of which between 80% to 85% of tenants would be operational when the centre opens next month.
“The investment of the major high-end brands shows confidence in the region. We are finalising a few more international brands coming to the centre,” De Necker said.
The mall would celebrate opening season with weeks of festivities. The celebrations would last at least three months after the official opening, De Necker said.
Announcing some of the 250 retail brands to operate over two floors, Baywest marketing manager Samantha Hewitson said it would include US baked goods retailer Cinnabon and popular global outlet The Bubble Tea Company.
Hewitson said other firsts for the region included a Champagne and Sushi Bar, headed by Port Elizabeth restaurateur Mark Oosthuizen, owner of Fushin Sushi Bar in Stanley Street and at the Sunridge Village.
Famous Brands would also unveil new-look stores and menus at its Baywest Mall eateries, including Fishaways, Steers and Debonairs.
Other leisure activities making the centre a destination shopping centre like Canal Walk in Cape Town include a Fun Factory entertainment zone, the biggest drawcard being an ice rink where ice hockey teams and figure skating champions would be able to practice along with novices.
An enormous screen would be in the mall’s food court.
“The Fun Factory also has a state-of-the-art games arcade featuring games and entertainment attractions from the US,” De Necker said.
It incorporates a bowling alley and a wing of Ster-Kinekor cinemas. The cinemas will include an Imax cinema and Ster-Kinekor’s luxury Cine Prestige.
For the fashion-conscious, Hewitson said British high street fashion brand River Island, London footwear and accessory brand Dune, Canadian lingerie label La Senza and British fashion brand Topshop would all be tenants at the mall.
Source: Herald via I-Net Bridge
THE Foschini Group aims to almost triple the number of its stores across the rest of Africa over the next five years, its chief executive said on Tuesday.
Foschini is the biggest reseller of Adidas and Nike products in South Africa where it is the third-biggest clothing retailer by market value and operates more than 2,000 stores.
It currently has about 130 outlets on the continent outside it home market, mostly in southern African countries including Namibia, Lesotho and Botswana. But CEO Doug Murray said the company planned to up that number to around 350 by 2020.
“We are approaching Africa expansion as a long-term strategic project for the group,” he told the Reuters Africa Investment Summit. “We are not going to rush in at any cost,” he said.
Mr Murray did not specify where the new stores would be opened, but said that Foschini wanted to enter the Kenyan market.
Home to some of the world’s fastest-growing economies, sub-Saharan Africa is increasingly attracting interest from retail executives across the world.
But tapping into that growth is difficult due to a shortage of the sort of prime retail space companies like Foschini favour in lucrative markets such as Nigeria.
Mr Murray said congestion in ports and poor supply chain infrastructure, such as roads and warehouses, were hindering faster store roll-outs on the continent.
“We found it was not easy to trade in Lagos when we opened our two stores there a few years ago. Getting our products from the ports to the stores is very difficult,” he said.
Foschini recently agreed to pay £238m for upscale British apparel retailer, Phase Eight, in a deal that gives it access to European markets.
This is despite Business Day reporting last year that GPI had opted to drastically cut back its Burger King store opening target from 100 by the end of June this year to just 60.
The aggressive expansion was held back by the various approvals required by the respective municipalities to open Burger King outlets‚ as well as a strike-induced shortage of certain materials needed to kit out kitchens and serving areas.
GPI CEO Alan Keet said on Monday, 2 March 2015, Burger King now operated 34 stores (mainly in Cape Town‚ Johannesburg and Durban) and would achieve the revised store target on schedule.
“After June we think the Burger King roll-out will accelerate. There’s no shortage of good sites available to us. We will already reach our five-year development programme commitment to our Burger King parent by the end of this year.”
While the local economy is soft Burger King openings have proved popular with SA’s burgeoning middle class and it is not unusual to see long queues outside certain outlets.
Keet stressed that GPI was 100% happy with the margins being achieved‚ noting the operating margin at the end of December was about 56%. He was confident this could be fattened to about 60% in the medium term.
The co-founder of Mahura Investments‚ Craig Gradidge‚ said it was prudent for GPI to hold back on the initial expansion plans. “As a long-term investor‚ I would rather the company gets the Burger King roll-out right and enjoys margin expansion. You don’t get these kinds of deals every day….
Keet said new roll-out plans favoured the opening of drive-through Burger King outlets‚ which can generate higher revenues than “inline” and food-court stores. He disclosed that GPI had set a target mix for 40% of its Burger King stores to be drive-through format.
GPI’s interim results released on Friday showed Burger King more than tripled revenues to R134.5m‚ and showed a smaller operating loss of R27.6m (previously more than R40m).
Source: BDpro via I-Net Bridge
EDCON Holdings says it is considering a sale of noncore stores as it struggles under the weight of crippling debt and low apparel retail sales growth.
This comes as total debt of R19.8bn in the nine months to December 2013 had risen to R21.7bn in the same period last year, the group said during its quarterly report on Friday. In the year ended last March, Edcon reported a loss of R2.5bn.
While cash sales of merchandise rose 11.8% in the nine months to December, credit sales declined 7%. Normally, credit sales are bigger than cash sales. Retail sales of R8.8bn in the December quarter were only 0.5% higher than in the same period a year ago. Trading profit was R919m in the nine months.
The group has not named the assets it may put up for sale, but household goods retailer Boardmans and CNA, a retailer of stationery and other consumables, are clearly noncore to its clothing business.
“Edcon has initiated a process to eliminate operational inefficiencies,” group CE Jürgen Schreiber said on Friday.
“This includes the streamlining of roles and responsibilities, consolidation of certain functions, elimination of duplications and the leveraging of technological opportunities.”
Founded in 1982 by Tom Boardman, a former CE of big four bank Nedbank, Boardmans was acquired by Edcon in 2004. It now has 34 stores.
In 2007 Edcon was taken over by private equity house Bain Capital in a debt-laden R25bn buyout. But the global market crash of late 2008 and subsequent poor economic growth in SA have damaged the domestic retail environment, also depressing the credit supply growth that has always been the bedrock of retailing business models.
CNA has 195 stores across the country, selling products from stationery and newspapers to books and music CDs. The chain’s former 139 stores were rescued from liquidation by Edcon in 2002.
Despite the growth in stores and other capital investment, CNA’s then R7.4bn turnover had plunged to R2.1bn in the year to March last year. Operating profit had also declined, dropping from R163m in March 2012 to R69m last year. Edcon has not provided segmental information for the nine months to December.
Beauty, fragrances and cosmetics brands retailer Red Square’s 39 stores are another likely candidate for sale or closure. They occupy standalone stores inside shopping malls, and are a duplication of the same beauty products that can be found inside every Edgars store, usually in the same mall.
Divisions of the group are in talks with labour unions over possible retrenchments, according to sources within the South African Commercial, Catering and Allied Workers Union
Edcon on the brink after poor quarterlies
EDCON’s dismal results for the third quarter to December reinforce analysts’ views that the once high-flying clothing retailer has little future in its present form.
The heavily indebted group, the largest nonfood retailer in the country, which was bought in 2007 by Bain Capital for R25-billion in South Africa’s largest private equity deal, reported marginally higher sales for the three months.
However, its sales figures were far behind those of major rivals, such as Mr Price, for the same period.
But more worrying was that Edcon’s financing costs soared 20.6% to R856-million for the quarter, due to its increased debt levels and higher effective interest rates.
The weak performance in the most profitable quarter for retailers prompted management to comment obliquely on the group’s crippling debt position. “Edcon continues to assess ways to improve the capital structure,” the financial results noted.
This referred to the process of eliminating operational inefficiencies initiated after that quarter.
“This includes the streamlining of roles and responsibilities … and the leveraging of technological opportunities. This process will result in a reduction of headcount within Edcon’s head office,” the group said.
But it seems to be too little, too late, say analysts, who believe Edcon will struggle to avoid business rescue.
A buyout of part or all of Edcon is the most favourable outlook for the bondholders.
“They can’t continue like this,” retail analyst Syd Vianello said. “They’re getting closer and closer to D-day.”
Edcon’s bonds, which have plummeted in value in recent months, are pricing the group as if it were insolvent.
Vianello said that in any capital restructuring, it was unlikely that the bondholders would agree to take equity in Edcon in return for their debt.
And Bain Capital was unlikely to put in more cash.
MTN could outsource management of its retail stores and field staff, with an industry insider suggesting a deal with Brightstar is on the cards. By Lloyd Gedye.
MTN could outsource management of its retail stores and field staff, with an industry insider suggesting a deal with Brightstar is on the cards.
The industry insider said telecommunications multinational Brightstar is busy headhunting a range of individuals from senior staff to juniors, recruiting from the ranks of Vodacom, Samsung and LG.
Brightstar is the world’s largest specialised wireless distributor and offers a range of ancillary services to these markets. It has set up shop in eight African countries including Nigeria, Mozambique, Namibia, Botswana and Egypt.
Contacted by the Mail & Guardian this week, MTN admitted it was “engaged in a reconsideration” of its supply chain, as part of its drive to become a more efficient company.
But the company said no contracts had been signed, so the matter could not be discussed.
Brightstar’s vice-president of global marketing and communications, Deb Miller, referred all queries about the mooted deal to MTN.
The industry insider said there was speculation in the job market, with some of the telecom’s staff unsure if they will keep their jobs.
The insider said that when Nashua Mobile closed last year, 3 500 staff were affected. The potential job losses at MTN could be huge as it has a much larger retail presence.
The insider said the scope of the work of the deal did not appear to be finalised yet, but could stretch from total store management to sourcing staff for the stores.
The scope could also include running promotions and interacting with handset manufacturers.
“This is a strategic move by MTN,” said the insider. “They are going back to being a network operator. Retail is a different beast. They don’t have control over it.”
The news of a potential deal between the telecoms operator and Brightstar comes at a time when there is speculation that more than 500 staff could be affected in the ongoing restructuring of MTN Business.
The company retrenched 476 staff in 2014; trade union Solidarity voiced its concerns about regular retrenchment processes at the mobile operator.
MTN is losing substantial market share to rival Cell C, dropping from a 32% market share to a 27% market share in 2014.
According to a Blue Label interim report released this week, MTN dropped two percentage points in the prepaid market between June and November last year.
In 2013, Brightstar reported global gross revenues of US$10,5bn and employs about 9 000 people on six continents.
In October 2011, MTN South Africa partnered with Brightstar, an agreement whereby the company was to provide the mobile operator with device portfolio management services and supply chain services.
Brightstar was responsible for the telecom’s full portfolio of handsets, data devices, laptops and tablets.
The argument put forward by MTN for the review of its operations was that it would free up the company to serve its customers better.
Its executive for group corporate affairs, Chris Maroleng, said: “MTN South Africa has not concluded any contract and as such it would be premature to comment on this matter. We have nothing to hide. No contracts have been signed.”
Maroleng also pointed out MTN was in a closed period with its results set to be announced on 4 March. — (c) 2015 Mail & Guardian
Telkom says it will close ‘some’ of its 95 Telkom Direct Stores as part of a restructuring plan announced on Monday (16 February).
The company aims to “unlock further cost efficiencies” within four areas of the business, namely, certain Telkom’s Direct Stores, Call Centres, IT Legacy Systems and internal printing and Supply Chain and Properties.
Telkom said it has completed a stringent procurement process and has identified external companies to undertake call centre operations, the management of IT legacy systems, a company to undertake the management of Telkom warehouses in the Supply Chain area of the business, as well as a company to take over internal printing activities.
Trade union, Solidarity said that the process, which Telkom denied, could possibly affect as many as 10 000 employees.
Solidarity said that Telkom is planning to restructure its field force division; however, the telecoms firm denied this.
“A Section 197 process has been initiated for staff impacted in these areas of the business. These affected employees will be transferred to their new employers in the coming months,” the telco said in a statement.
It said that a meeting with Organised Labour took place on Monday morning. “The official consultation process will begin on Friday this week, with more consultations to following over the coming weeks. Affected staff have also been informed.”
Telkom said further that it conducted detailed analyses of the viability of all the Telkom Direct Stores.
“The research has shown that it is, unfortunately, no longer viable to continue running some of the company’s 95 stores. It is clear that significant cost efficiencies can be realised, by closing down these unviable stores,” it said.
“These affected employees have today been notified of the decision and, in terms of the Labour Relations Act, have been issued with Section 189 Notices.”
“Telkom will explore every option to place the affected employees impacted by this process in other areas of the business. Should such attempts be unsuccessful, some of the affected employees may unfortunately be retrenched,” it said.