Published Date: 2021-07-19 | Source: INCE|Community | Author: The Finance Ghost
The property funds were the first out of the blocks with announcements on damage to properties. You can find those summaries here
. The retailers caught up on Friday, although some of them had already made announcements earlier in the week (like Cashbuild
and Mr Price
Weirdly, Spar gave an update via a media release rather than a SENS announcement. Nevertheless, a summary of that update is included here as well, along with announcements from Massmart, The Foschini Group and Pepkor.
Walmart executives no doubt watched in horror from the US as their ever-suffering investment in South Africa faced more setbacks. The aerial images of the looting of the Game warehouse in Durban will be remembered for years to come.
The share price took severe pain last week, which was profitable for those on the right side of that trade. By Friday, there was a small recovery in the price based on an announcement from the company.
Massmart confirmed that 18 Cambridge, 10 Game, 8 Builders, 3 Cash & Carry and 2 Makro stores were looted. Two of the distribution centres were "directly impacted" (a euphemism of note based on the scenes on the news) and four facilities suffered significant fire damage.
Surprisingly, the group is upbeat about its ability to service the stock needs of its stores, through business continuity replenishment plans that shift capability to other distribution centres. If Massmart does manage to trade without suffering stock shortages, the group will need to take a serious look at why it carried so much stock in the first place!
A strong and necessary statement was made regarding Walmart's willingness to stick around and help rebuild our country. Walmart have "unambiguously expressed their commitment" to Massmart. That was enough for a 2.6% recovery in the share price on Friday, although it still ended over 11% down for the week.
The Foschini Group
TFG planned to open another 200 stores by the end of the 2022 financial year. That gives context to the shocking reality that approximately 190 South African stores were looted and damaged last week.
On the plus side, the supply chain was not materially impacted although there was damage to a distribution centre and a local supplier.
TFG did not give an indication of what the financial impact could be to this financial year. There was also no specific comment made about whether this could affect plans to open new stores. I found it interesting that the company chose to mention its existing roll-out plan though.
All stores in KwaZulu-Natal are not trading due to security concerns.
Thus far, 489 retail stores have been damaged and looted, representing around 9% of the group's retail footprint. One of JD Group's distribution centres in Cato Ridge was also looted.
JD Group has 16 distribution centres countrywide and the stores in KwaZulu-Natal, once reopened, will be serviced from those centres.
Spar's head office is in Pinetown. As the only food retailer headquartered in Durban, Spar was in the thick of the destruction.
It's worth remembering that Spar operates a franchise model. Where stores have been destroyed, these are typically family businesses rather than corporate-owned stores. This is a similar situation to Famous Brands where the listed company is less impacted than the families that bought franchises.
A total of 184 stores were looted and vandalised, including 62 TOPS liquor stores and 32 Build it stores. Spar has had a tough time with TOPS stores being heavily restricted from trading over the past year, so this is truly the icing on a revolting Covid cake.
7% of the Spar network across Southern Africa has been impacted, which is substantial.
On the plus side, Spar planned to make deliveries over the weekend to all stores in KwaZulu-Natal that were able to open. This hopefully brought much-needed relief to the communities that struggled to obtain groceries and household items.