Truworths must come up with a new strategy

Truworths has had the same CEO for just under three decades. Michael Mark is the longest-serving leader in the local retail sector. In that time, SA transitioned to a democracy and what was essentially a closed market opened up to more competition.

But the department store style retail landscape of yesteryear died a slow death, finally expiring with Stuttafords when it closed its doors officially on July 31. The scope of contenders now begins and ends with Woolworths and Edgars.

Entrants such as Sweden’s H&M are making serious headway in the country. Without the legacy issues of long-standing retailers — such as store credit sales — the chain is proving popular with many consumers.

H&M may be struggling in its home and core markets, but its business is booming in SA, showing that despite the slowdown in spending, consumers will choose to buy where they feel their needs are being met.

The chain has just opened its 12th store and has plans to open five more in 2017 alone. As Par Darj, country manager for H&M SA, says, “We see a lot of potential in SA. Our aim is to constantly meet and exceed the expectations of our customers.”

Truworths’ full-year results made it all too clear that it is no longer the retailer of choice for the local shopper.

While 25 years at the helm is an admirable feat for Mark, the company needs a new set of eyes and a new vision to navigate the industry as it is now.

Emira Property Fund managed to sell 11 assets in its most recent financial year as it struggled with vacancies, but the company has not done enough yet to convince investors that its fortunes will improve. Management needs to do more to restore confidence in a company that listed back in November 2003 and has had a number of leaders since.

The diversified real estate company’s results for the year to June 2017 did not please investors. The share price was 1.46% lower at R14.18 on Wednesday and 1.62% lower at R13.95 on Thursday at 2.05pm.

Emira warned the market a year ago that its dividend would shrink. It was the first property company to have the courage and foresight to make such a warning, but it needs to continue in this vein.

In line with the warning, Emira declared a dividend of 143.18c a share for the year to June 2017, 2% down compared with the 2016 financial year.

At year-end, Emira had improved vacancies across its portfolio to 5.3%, from 7% at its December half-year. But its office vacancy at 12.5% was still higher than the industry average of 11.8%. Even though the company has introduced policies to revamp or sell its aged offices, investors are waiting for Emira to make a landmark acquisition here or abroad. This is while many other medium-sized property groups have invested offshore and diversified their risk and income streams.

But investors were not pleased that Emira would not give a forecast for its dividend for the June 2018 financial year. Management said operating conditions and the South African political environment were unpredictable and the company did not want to release forecasts that it may not be able to meet.

Still, listed real estate investors have become accustomed to property companies giving some kind of forecast. Emira should do the same soon.