annual report 2009
Howard Godfrey
@home
POSITIONING
The @home division is made up of stores of two formats. The first, @home, sells a wide range of homewares to the LSM 8 – 10 groups. The second, @homelivingspace, offers a comprehensive range of contemporary furniture and décor items in addition to the full @home offering, targeted at the same LSM groups.
The number of @home stores currently stands at 65, while there are seven @homelivingspace stores, bringing the total in the division to 72 stores.
The division opened @home stores in 2001 in leading retail malls in the major centres of South Africa, while the @homelivingspace concept dates back to 2006.
A franchise arrangement operates in the United Arab Emirates with the Al Tayer Group LLC, and there are now six franchised @home stores in that region.
| 2009 | % change | 2008 | |
| Turnover (R million) | 508,1 | 10,9 | 458,0 |
| Number of stores | 72 | 18,0 | 61 |
| Floor area (gross m2) | 38 766 | 40,4 | 27 605 |
| Number of employees | 740 | (2,1) | 756 |
REVIEW OF THE YEAR
Despite the effects of the global recession on consumer spending the division has held up reasonably well, particularly if expenditure on homeware and gifts is regarded as non-essential. Turnover for the year rose by 10,9%, with same store growth dropping by 1,3% primarily due to the highly competitive sector as well as turnover cannibalisation as a result of opening some new stores in close proximity to existing stores. What is pleasing is that turnover growth in the second half of the year was 15% compared to 6,1% in the first half. Similarly, same store growth in the second half was 1,9% compared to -4,9% in the first half of the year.
The last quarter of the year saw reasonable same store growth of 3%, which was encouraging in the difficult trading conditions which prevailed.
During the year five of the first @home stores opened were refurbished. These are located at Canal Walk, Cavendish, Sandton, Eastgate, Menlyn and the V&A Waterfront. Customers are reacting favourably to the new presentation.
In the year under review the division opened 11 stores, of which seven were in the @home format of approximately 200 to 400 square metres in floor area, while four were @homelivingspace stores, which have a floor space of approximately 2 000 square metres. The latter stores are located in Port Elizabeth, the West Rand, the East Rand, and the division’s three-storey flagship store in Melrose Arch. The last mentioned store is linked to the Foschini store in the recently opened upmarket centre where it is located.
The franchised chain in the United Arab Emirates and Bahrain, which has six stores, has traded satisfactorily, and six more of these stores are planned in the foreseeable future. It appears that the @home concept has been well accepted in that region.
| 2005 | 2006 | 2007 | 2008 | 2009 | |
| Markdown value (Rm) | 16,0 | 27,1 | 39,3 | 47,3 | 46,5 |
| % of sales | 5,6 | 7,5 | 8,3 | 9,0 | 8,0 |
Markdown sales were at an acceptable level for the difficult economic conditions which prevailed.
Trading density for the past year (including the @homelivingspace stores) was R19 600 per square metre.
STRATeGy
The division will continue its roll-out programme for both the @home and @homelivingspace chains. In the next year ten further stores will be opened, of which five will be the larger @homelivingspace format. Two will open in Pretoria and one of each in southern Johannesburg, Cape Town and Durban.
The difficult economy presents the division with a challenge to provide exceptional products and service to customers. These goals will be the key focus for the division’s teams in the current testing times, together with a keen focus on the retention of margins and the control of costs.
pROSpeCTS
Continued efforts are being made to find suitable sites to meet growth requirements for both @home and @homelivingspace stores, and revenue from newly opened stores will help to sustain the division’s consistent pattern of growth.
Trading conditions are uncertain and difficult, particularly as the division imports the greater part of its merchandise and fluctuations in the value of the Rand currency must be balanced against price adjustments made by suppliers. Fortunately the trend in these prices has recently been downward, reflecting the recessionary conditions prevailing globally.
Inventory control will be a paramount factor in maintaining trading margins, and improvements in the efficiency of the supply chain for the division’s merchandise, stemming from the group’s overall initiative in this field, will help to offset some of the negative factors in the current trading environment.
While trading conditions in the Middle East are no easier than those prevailing locally, our franchise partners are still in an expansionary phase and the roll-out of their new stores will also provide a boost to the division’s revenues and profit.
| Store statistics | Projection | ||||||
| 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |
| @home | 34 | 39 | 49 | 58 | 65 | 70 | 78 |
| @homelivingspace | – | 2 | 2 | 3 | 7 | 12 | 12 |
| Total no. of stores | 34 | 41 | 51 | 61 | 72 | 82 | 90 |
| Franchise stores | – | – | – | 2 | 6 | 9 | 12 |
| Closures | – | – | – | – | – | – | – |
| Floor area (m2) | 13 405 | 18 624 | 21 906 | 27 605 | 38 766 | 41 000 | 45 000 |
