Spitz owner AVI says footwear sales walked all over its results
By Nick Hedley - Mar 12th, 10:27
AVI, whose brands include Bakers biscuits and seafood business I&J, said on its footwear businesses struggled the most in the six months ended December.
Revenue from the group’s footwear and apparel operations, which include the Spitz and Green Cross brands, decreased by 9.2% to R1.1bn while operating profit fell 20.9% to R270.8m.
That weighed on the group’s interim numbers. Group revenue declined 3.2% to R7.1bn, while profit after tax declined 6.5% to R994m.
AVI said footwear sales volumes within Spitz fell 8.2%, even though the selling prices of core ranges had not been increased since April 2016.
“Consumer demand was subdued and the business was not able to repeat last year’s record December sales performance,” AVI said.
Revenue from Green Cross fell 20.4% largely due to lower sales volumes, the group said.
“Sales volumes were impacted by soft demand and widespread discounting in the midprice comfort footwear segment, exacerbated by poor performance of the summer range in retail doors.”
In November 2018, Green Cross launched a consultation process with affected employees following an in-principle decision to stop all manufacturing operations at its facility in Epping, Cape Town.
Restructuring provisions of about R15m had been included in the interim results, AVI said.
Green Cross recorded an operating loss of R18.8m, compared with a profit of R4.4m a year before.
Meanwhile, AVI’s Snackworks unit grew revenues 3.8% to R2.3bn, although operating profit decreased 5% to R429m.
I&J’s revenue decreased by 2.1% to R1.2bn.
AVI said the trading environment was expected to remain difficult, with constrained consumer spending.
“Our expectation is that many of our categories will continue to have low, or even negative, growth rates until there is a meaningful improvement in the economy.”
However, the group said there was “a reasonable prospect of a stronger second semester” if current sales volumes were sustained and I&J’s catch rates remained in line with forecasts.Business Live
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