Tag: results

What South Africans bought this Black Friday

Black Friday 2020 sales volumes in South Africa were higher than last year, but the growth was far lower than expected.

The follow are highlights of the day:

  • 2020 was very different from previous years, as purchasing activity did not start at midnight
  • Sales volumes after midnight were down 33% while there was 63% less spending during this period. Volumes started to pick up at around 08:00
  • There were surges between 08:00 and 09:00, and 19:00 and 20:00. These were more impulse buying, with high volumes but far lower basket values
  • Black Friday as a whole saw an increase of 14% in sales volumes, much lower than the expected 35% growth
  • There was a 400% increase in sales when compared to a typical weekday
  • The most popular item was the air fryer, with disposable face masks coming in second
  • Dishwashers were among the most popular appliances
  • Takealot’s more traditional top sellers were Samsung and Hisense TVs, the PlayStation 4 console and 3 Game bundle, laptops, wearable tech such as the Garmin Fenix 6X Pro Sports Watch and Apple AirPods Pro
  • In Massmart stores Makro and Game, top sellers were 25-litre cooler boxes, Smart HD TVs, Raleigh bicycles, rechargeable lanterns, fridge/freezer combos and kettles
  • Makro shoppers who opted for the Click and Collect option did so not to avoid a trip to the store, but to reserve highly desirable products. When they collected the product in store, they shopped more.
  • BankServ Africa’s preliminary tally of Black Friday transactions shows total in-store card purchases numbered 4 967 022 (30% down from 2019)
  • Online sales reached 868 903, which was 62% up on 2019’s figures
  • 95% of payments were done through credit and debit cards, dwarfing EFT

Karen Nadasen, PayU South Africa CEO, puts the lower-than-expected growth and low midnight sales down to a few factors:

  • The big Black Friday deals expected at midnight did not materialise
  • There were many retailers which only put their deals up in the morning
  • There was a big decline in airline ticket sales, which typically account for large Black Friday volumes

Image credit: Thapelo Morebudi/Sunday Times

Big growth for Takealot and Mr D Food

By Jamie McKane for MyBroadband

Naspers has released its financial results for the year ended 31 March 2020, showing impressive revenue growth for Takealot and Mr D Food.

“Takealot, South Africa’s number 1 etailer, extended its leadership and grew Gross Merchandise Volume (GMV) 46% year on year in local currency,” Naspers said.

“Takealot’s trading loss reduced by 20% in local currency and would have improved more, but for investment in the promising food delivery business.”

Naspers said this growth was driven partly by improving gross margins and disciplined management of operating costs.

Takealot recorded revenue growth of 28% in local currency, one of the main drivers of which was the marketplace business, which grew GMV by 77% year-over-year.

“Mr D Food, South Africa’s leading food-delivery service, continues to scale as it expands the local market for food delivery,” Naspers said.

Naspers also noted that Takealot was allowed to sell and deliver only essential items in the first phase of the COVID-19 lockdown, and Mr D Food was unable to operate while takeaway restaurants were closed.

Surge in demand
The reopening of e-commerce under the national lockdown has resulted in a surge in demand for online shopping.

This, in turn, has led to Takealot and other online retailers being flooded with orders which has resulted in significant shipping delays for many products.

A source close to Takealot told MyBroadband the company is now generating close to R1 billion in sales per month – around double their usual volumes.

Takealot did not confirm these numbers when it was asked for comment, but other e-commerce players also told MyBroadband their sales have more than doubled in recent weeks.

Many other online shops have increased their expected delivery times by over a week to address logistics bottlenecks.

By Jo Francis for Printweek

Antalis has described its first half performance as “resilient” in the face of declining overall demand for paper and supply issues caused by events at the Arjowiggins paper mills. However, one-off costs have resulted in increased losses for the period.

The group is the biggest distributor of paper, packaging, and sign and display materials outside of the USA. It has been working to establish a new shareholder structure since February, and its majority shareholder Sequana went into liquidation in May.

Antalis said the search for a new shareholding structure, with support from Goldman Sachs, continued and was “proceeding in line with the plan”.

The group’s results for the six months to 30 June were in line with its preliminary figures announced in July. Turnover fell by 5.4% to €1.072bn (£950m) on a like-for-like basis, while EBITDA was down by nearly 10% at €30.1m (2018: €36m).

The Papers business suffered a sharp decline in sales of 7.6% to €714.1m, growth at its Packaging business was described as “weak” with sales nudging up 0.3% to €254.2m, while Visual Communications was “stable” with sales down 2.4% at €103.9m.

The bottom-line loss for the period increased from €16m to €27m, with one-off costs including a €10.2m asset writedown mainly related to goodwill at its Latin American business, and restructuring costs of €9.8m. The group also implemented accounting standard IFRS 16 for the first time, which resulted in a further €3m hit to the figures.

Sales in the UK and Ireland slipped by 5.6% to €282m, with Antalis describing market conditions as “difficult… notably due to Brexit” although the UK did better than the general market contraction.

Chief executive Hervé Poncin said: “In H1 2019, the group’s operating performance was impacted by the decline in volumes of Papers in a market that contracted by around 7%, and by the bankruptcy of one of our graphic and recycled papers suppliers.

“Against this backdrop, we have continued to adapt our structure to changing patterns of demand and we have significantly reduced our overheads, particularly our logistics and marketing costs.”

Arjowiggins Graphic had supplied around 4% of the group’s purchases, in value terms.

Antalis stated that it had complied with its banking covenants and had strengthened its liquidity with an amended factoring agreement. This has increased its facility from €215m to €290m through the inclusion of an additional finance partner.

Net debt fell by 4.1% to €318m, although under IFRS 16 the net debt figure increases to €434m.

Sales at the group’s Papers division are expected to continue to decline, although it expected a better second half now the situation at Arjowiggins Creative Papers in the UK had been successfully resolved.

“In H2 2019, Antalis should benefit from the launch of new ranges of recycled products and the relaunch of Arjowiggins Creative Papers ranges following its management buyout. Packaging and Visual Communication should show resilience over the coming months and continue to grow their contribution to the Group’s consolidated gross margin,” the group stated.

It anticipates that full year sales will be down by between 6%-7%, with EBITDA margin of 2.7%-2.9%.

Antalis shares fell by 14% to €0.90 after the announcement.

HP posts upbeat results, boosts outlook

Source: Financial Times 

Hewlett Packard Enterprise posted upbeat quarterly results and issued a rosier outlook that topped analyst forecasts, sending shares higher.

HPE — the enterprise technology business that split off from HP Inc’s PCs and printers unit — says its fiscal third quarter net revenue climbed 4% from a year ago to $7.76-billion — or a 1% rise when adjusted for currency effects.

That topped analyst forecasts for $7.68-billion, according to a Thomson Reuters survey.

Revenues in hybrid IT — its largest division, which includes computer systems with storage and networking functions — rose 3% from a year ago to $6.2-billion.

In its so-called Intelligent Edge division, which is developing decentralised “Internet of things” technology that allows data to be processed at the point of collection, revenues were up 10% from a year ago to $785m, while financial services revenues rose 3% to $928-million.

Net income rose to $451-million or 29 cents a share in the three months ended in July, up from $165-million or 10 cents a share in the year ago quarter.

Adjusting for one-time items, earnings of 44 cents a share, handily topped forecasts of 37 cents.

“HPE has delivered a strong Q3 and our results prove we have the right strategy to deliver in the areas of highest value for our customers,” says Antonio Neri, chief executive officer.

“Solid execution across each of our business segments, combined with market momentum, will enable us to deliver FY18 revenue and earnings well beyond our original outlook,” he adds.

The company also lifted its full-year earnings outlook again, to a range of $1.85 to $1.90, up from $1.70 to $1.80 previously.

On an adjusted basis, the company now expects to report earnings of between $1.50 to $1.55 a share, up from $1.40 to $1.50 previously. That also exceeded Wall Street’s projections of $1.46.

For the current quarter, HPE forecast adjusted earnings of between 39 to 44 cents a share.

The Palo Alto-based company also says it appointed Tarek Robbiati as its new finance chief effective September 17. Mr Robbiati, who most recently served as finance chief at Sprint, will succeed Tim Stonesifer, who will remain with the company through the end of October.

HPE shares, which are up nearly 17% year-to-date, climbed 1.4% in extended trade to $16.98.

At the end of 2017, BIC’s stationery category showed a much-need improvement – but the upward trend seems to have been short-lived.

For the three months ended 31 March 2018 (Q1), sales in the stationery segment of the business declined 8.3% to €151.8-million ($18.5-million).

Overall, BIC Stationery saw adjusted profit increase 60% to €9,6-million – largely due to ofsetting raw material costs and dealing with currency fluctuations.

Key take-aways from the figures are:

  • Sales in Europe were flat – the UK and France showed a decline, which was offset by growth in other European areas
  • Sales in North America increased in low single digits
  • Strong trade in Mexico ofset a weaker Brazil, giving Latin America low-single-digit improvement
  • EMEA (the Middle East and Africa) sales were boosted to double digits, thanks to a robust back-to-school season in South Africa
  • BIC’s Indian subsidiary, Cello Pens, reported flat domestic sales as it continues to streamline its portfolio and increase brand awareness

Bidvest on Monday reported a better set of first-half results, leveraging off the diverse nature of its portfolio.
Easily one of the better proxies of the local economy, its portfolio spans services, freight, automotive, office and print, commercial products, financial services and electrical companies.

Trading profit rose 12% to R3.1bn in the six months to end-December, as revenue rose 10.7% to R39.9bn.
The services, freight, and office and print divisions were the standout performers, with increases in trading profit of 24.3%, 18% and 12.7%, respectively. The automotive division disappointed though, with trading profit down 6%.

Bidvest SA also counted on the acquisition of facility management services group Noonan, as well as the additional three-month contribution from Brandcorp.

The share of profits from associated companies, before capital items, was up 26.4%.

Bidvest holds investments in pharmaceuticals group Adcock Ingram (38.5%), airline operator Comair (27.2%), Mumbai Airport (6.75) and a 52% interest in Bidvest Namibia.

But trading profit in Bidvest Namibia slumped 68% as a result of what the group said was sluggish economic growth
in that market, and fishing industry and operational challenges.

All in all, group headline earnings per share (HEPS) rose 12.5% to R5.74 and interim dividend per share 12.3% to R2.55.

By Andries Mahlangu for Business Day

Shoprite announced subdued growth on Tuesday, blaming deflation for its lacklustre performance.

The group increased its turnover by 6.3% for the six months to December 2017 – less than half of the 14% achieved in the same period in 2016.

CEO Pieter Engelbrecht said overall internal price deflation occurred in the last quarter, and that the slowdown in turnover growth should be viewed in the context of average grocery price inflation decelerating to 0.4% during the reporting period. It was 7.4% in the corresponding period.

Supermarkets RSA, Shoprite’s primary business, increased sales by 7.8% during a period when internal inflation fell to 0.4% for the six months compared to 7.4% in the previous corresponding period, driven mainly by a drop in the price of basic commodity items.

Shoprite said economic and trading conditions in its foreign markets remained unchanged, and as a result the group’s non-South African supermarket operating segment reported a 0.4% drop in rand terms.

The impact of lower commodity prices and the depreciation of local currencies remained prevalent in the larger economies it operates in outside South Africa, the group stated.

Shoprite’s furniture division reported increased sales of 10.8% while other operating segments, mainly driven by the OK Franchise division’s performance, saw 6.7% growth.

Engelbrecht said this was pleasing given low internal price inflation, and was in line with the group’s South African supermarket performance.

Shoprite’s interim results are scheduled for release on February 27.

Shares in Shoprite were trading at R214.54, up 0.72%, on the JSE on Tuesday.

Source: Fin24.com

Prospects for the retail sector remain weak and are unlikely to improve in 2017, as confirmed by Massmart’s interim sales update released on Monday.

In the 26 weeks to June 25, Massmart recorded R42.5bn in sales, representing an increase of 0.5% compared with the year-earlier period. Comparable store sales fell 1.6%. Product inflation was estimated at 3.2%.

Massmart’s share price initially dipped more than 2% after the announcement, but bounced back into marginally positive territory. “I don’t know if there was anyone who was massively disappointed by the update,” said Old Mutual Investment Group consumer and industrial sector analyst Brian Pyle.

“Nobody really expected anything else other than what Massmart reported today. People are expecting tough times and the update shows it. That said, these numbers are weak.”

Comparable store sales fell at most of the company’s trading divisions. Like-for-like sales fell 3.5% at Massdiscounters, by 0.2% at Massbuild and 3.3% at Masscash. Masswarehouse grew comparable sales by 1.5% with inflation of 3.9%.

Mergence Investment Managers portfolio manager Peter Takaendesa said the food side of the business performed better than nonfood categories. Sales growth in food was 3%. In general merchandise it fell 2.9%.
“As we saw in the recently reported Woolworths numbers, the trend of better food sales relative to nonfood consumer goods is evident in Massmart’s numbers. Consumers are largely in survival mode and discretionary items have to take a back seat for now,” he said.

The biggest concern for all retailers was the downward trend in growth rates to levels much lower than cost inflation. This came at a cost to profit margins, said Takaendesa.

For Massmart, he expected a technical improvement in the sales rate for the rest of the year, but a stronger recovery was only likely later in 2018 “and could be better if we get an interest rate cut sooner to help consumer confidence recover”.

“It’s going to be difficult for Massmart’s turnaround efforts to show the intended results given much weaker consumer spend and the mid-long term risks posed by independent e-commerce rivals such as Takealot, which need to be monitored closely,” he said.

Ashburton Investments said that it preferred Woolworths in this sector.
Woolworths said it expected its adjusted headline earnings per share for the year to June 25 to fall between 5% and 10%.

“Massmart’s update shows the really poor consumer environment in SA,” said Ashburton portfolio manager Wayne McCurrie. “This is not unique to Massmart. All consumer firms are suffering the same — a subdued consumer in recession.”

McCurrie said the performance of Massmart’s food division was reasonable and the performance of the nonfood goods was “terrible”, but that the market knew this after SA fell into recession.

Pyle said the next six months were not going to be any better for any retailer, but that the sector could see recovery in 2018.

By Colleen Goko for Business Day

Massmart could finally be starting to deliver after nearly a decade of less-than-inspiring results.

But the revival of the R91-billion annual sales Walmart-controlled retailer’s fortunes is far from being a slam dunk.

Massmart certainly pleased the market in its annual results announcement of a 15.8% rise in headline EPS (HEPS). This was greeted by a 16% rise in its share price.

Massmart’s pricey 25 p:e indicates that more of the same is expected. A big swing factor will be its ability to continue driving a recovery in its Massdiscounters division, which houses Game, one of the group’s flagship brands.

“Game is key to the Massmart investment case,” says Warren Jervis, manager of the Old Mutual Small & Mid Cap fund.

The signs are positive for the 165-store discount division. It came to the party in 2016, lifting profit before interest and tax (PBIT) by R129m (54.8%) to R364m.

It accounted for just under half the group’s total R264m rise in PBIT to R2.61bn.

The division’s 5.3% rise in sales to R20.5bn was nothing to rave about. Doing the heavy lifting was a rise in the PBIT operating margin from 1.2% to 1.8%.

But there is still a long way to go if Game is to return to its former glory when, at its peak in 2011, it delivered PBIT of R744m and a 5.6% operating margin.

Then the wheels started coming off. Key reasons for this included ageing stores and a failure to keep pace with a rapidly changing consumer electronics landscape. At its worst in 2014, the division’s PBIT stood at R181m.

Jervis believes Game’s recovery still has long legs. “There is no reason it cannot get its margin up to at least 3%,” he says.

It would make a big difference. On a 3% margin, Game’s PBIT contribution in 2016 would have been R615m.

A key factor in upping margins will be the rollout of Game’s SAP point of sale and enterprise resource planning systems.

“It will provide visibility of profit per product line,” says Sasfin Securities analyst Alec Abraham. “It will enable Game to fine-tune its product mix.”

Game’s turnaround was engineered by Massmart veteran Robin Wright, who stepped down as
divisional CEO in August 2016.

Tasked with the next recovery phase is Albert Voogd, who joined Massmart from Ahold, the Netherlands’ largest food retailer.

The selection of Voogd ties in well with Massmart’s big ambitions in food retail. There is already a notable swing in Game’s product mix to food and fresh produce which, together with a recently added liquor offering, accounted for 23% of Game’s sales in 2016.

This was up from 21.8% at the June interim stage.

Abraham agrees that Massmart can continue driving food retail sales at a well-above-market pace. In its favour, he notes, is a small market share of 2%-3% across its Game, Makro, Cambridge and Rhino brands.

But he has concerns about the general state of SA’s beleaguered consumer market.

“It does not support Massmart’s [big-volume, low-margin] business model.”

The signs of strain are already there, not least in the group’s largest division, Masswarehouse, which houses 20 Makro megastores.

While Makro did exceptionally well in 2016 to lift sales by 11%, it came at the cost of big margin pressure; PBIT of R1.25bn came in just 4.4% higher than 2015.

Taking even more strain was the Massbuild division, housing 102 stores under brands including Builders Warehouse and Builders Express. Sales for the year came in 5.6% up at R12.7bn, while PBIT — hit by margin squeeze — was up only 2.7% at R712.6m. More concerning is the fact that second-half PBIT was up a mere 0.7% year-on-year.

For Massmart, 2017 did not get off to a good start. In the eight weeks to February 19 the group reports total sales up a mere 0.6% and comparable (same store) sales down 1.5%.

It represents a significant slowdown against the previous three years. On a comparable sales basis, sales in the first eight weeks of 2016, 2015 and 2014 were up 6.9%, 7.9% and 7.7%, respectively.

Against the likes of Woolworths, trading on a 16 p:e, and even Shoprite on a 20 p:e, Massmart’s 25 p:e is looking decidedly stretched.

By Stafford Thomas for www.businesslive.co.za

French writing instruments vendor, BIC, has reported strong Q4 growth. According to the company, stationery sales increased by 7.8% to €165.6-million.

Sales were high in emerging markets such as South Africa and Brazil, owing to the back-to-school season, while in India sales also improved. The company reported mid-single digit growth in Europe and high-single digit growth in North America.

Overall, FY2016 sales for the Stationery division increased by 5.2% in constant currency to €736.6 million. Stationery volumes increased 1.5% to 6.9 billion units in 2016.
Looking ahead into 2017, the firm outlined priorities to deliver organic sales growth and gain market shares in the division through new product launches, increased R&D investment and new emerging channels such as e-commerce in developed countries.
Meanwhile in its Graphic arm, Q4 sales fell 13.6% to €94.6 million. Full-year sales also dropped, registering a 1.9% fall to €311.5 million.
BIC’s overall full-year sales rose 4.9% to €2.03 billion, while pre-tax profit dropped 10.7% to €408.1 million.
Earlier this month, BIC revealed that a strategic review of its promotional products unit would hit group FY2016 profits. The company has now revealed a €48.4 million hit from these operations.
Bruno Bich, chairman and CEO, says: “Our solid 2016 results are further testimony to the quality and strength of our business model. In a fast-moving and challenging market environment, such as in Shavers in the US, net sales growth was robust and consistent across all consumer categories. Despite the planned increase in operational investment, normalised income from operations remained healthy.
“In 2017, the volatility of currencies and the unpredictable global environment will require increased levels of agility from our teams to ensure continued success. We plan to deliver mid-single digit organic growth in Net Sales. We will continue to launch new products and strengthen our distribution, with a focus on e-commerce in developed markets.
“To enhance long-term growth, we plan another year of selected investments in R&D, CAPEX and Brand Support. The total impact of these investments on Normalized Income From Operations margin will be approximately -100 basis points compared to 2016, excluding major currency fluctuations.”

Source: www.finance.yahoo.com

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