SA port woes could hit fashion lines

There have been a host of problems at South African ports, in particular Durban, with some 71 000 containers stuck outside that entry point last week.Nick Wilson - Mr Price says the instability at Siuth Africa&#039;s ports could negatively affect the industry&#039;s autumn fashion lines in 2024 if delays persist.While South African retailers have increasingly been turning to local manufacturing to secure a large part of their supply chains, they still depend on overseas markets for most of their fabric, even if it is then turned into clothing locally.CEO Mark Blair said on Thursday that autumn products generally hit the shelf in February and March, meaning retailers needed to secure fabric timeously. Any delays in shipping could, therefore, cause hiccups down the line.Blair was speaking after the release of half-year results, with the group reporting that excess stock and load shedding helped cut earnings by about 10%. However, fresh summer inputs had helped the pose a recovery in its second quarter.Logistical nightmareWhile current port problems didn&#039;t present a major concern for the critical Black Friday and Christmas period, that was when "creaks start happening" because of the sheer volumes that get traded, he said.Earlier last week, News24 reported that there were thousands of containers stuck outside the Durban port. Logistical issues at both the South Africa&#039;s main ports are slowing down the movement of goods.Blair said the group has sufficient stock for the peak festive period, but that the retailer is watching the situation at the ports "like a hawk"."We had a very big vessel come in and dock on Monday, and another one is due later this week."Industry concernsBut whether the market would experience another crunch come next November and December depended to what extent repairs and new gantries would be in place at the ports to alleviate peak demand next year."That is what we are keeping our eye on," said Blair.His concerns about autumn clothing lines echo what another clothing retailer, Truworths, told News24 last week as well.A deep dive into the big business story of the week, as well as expert analysis of markets and trends.While that company&#039;s inventory levels for Black Friday and the festive period are adequate and not affected by the port issues, it did have problems with "deliveries late-for-festive-season demand, and yarn and fabric deliveries delayed, which may impact production in early 2024".TruworthsTruworths also said it is monitoring the situation closely and aims to try to mitigate any impact on its winter ranges in 2024.Blair meanwhile noted that Mr Price was making progress in terms of making use of local manufacturing for its clothing.He said a recent analyst report showed that Mr Price was the second-lowest importer of clothing, with some 54% of its stock manufactured in South Africa and its neighbouring countries.Blair said the group had also already reached its target for locally produced units per annum – some 100 million units a year - in terms of the industry&#039;s agreement with the Department of Trade, Industry and Competition."We are fully committed to local manufacturing," he said.Mr PriceAs far as its results were concerned, Mr Price reported that interim earnings fell almost 10% as comparable store sales went backwards amid a struggling consumer environment and intense power interruptions. Its gross margins also came under pressure as it was forced to mark down goods to clear excess inventory.Blair, however, was optimistic about a better performance in the second half of the financial year.He conceded that while Mr Price has been facing a tough economic climate and consumer environment for a while, this is also the sort of situation where the group would be expected to do better than its competition, because of its focus on the value segment of the retail market.Blair said a couple of things had worked against the company, including that it initially had a lack of backup power in all its stores when load shedding began intensifying in South Africa earlier this year. At the same time, it also grappled with internal disruption thanks to a change in a system which records data from transactions in real time.He said the new system had now been bedded down, while it also had backup power solutions in all its stores. Looking aheadWith these issues dealt with, it could now concentrate more on performance going forward, with Blair adding the "optimistic view" did not necessarily involve a consumer environment improving any time soon.He expected a tough consumer environment for at least another year.Blair said: “If things start changing, it would probably only start changing in the second half of next year, and even then, it might be muted.”But he said the group was focusing on improving quality and driving lower prices for consumers, as well as increasing its competitiveness."The thing that we have up our sleeve, although we play in the value segment, we have differentiated fashion value. We have got fashion capabilities internally that aren&#039;t possessed by many of our peers, especially at the value end." – Fin24

SA port woes could hit fashion lines

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