South Africa’s Woolies seeks to boost organic sales

JOHANNESBURG – South African food and clothing retailer Woolworths aims to triple sales of organic-content clothing to more than N$1 billion a year by 2012, Chief Executive Simon Susman said yesterday.

The group also wants to increase its organic food sales by a multiple of five by the same year, but declined in an interview to give sales figures. Woolworths – which boosted revenue by 21 percent to N$8.97 billion rand for the 26 weeks to end-December – wants to boost its green credentials as part of its recently adopted, five-year strategy plan to 2012.The retailer said the plan centred on four key priorities: accelerating transformation, driving social development, enhancing its environmental focus, and addressing climate change.Susman told Reuters that outside of a small organic industry in South Africa, the major sources for organic products were in Uganda, Tanzania and India.”We can do some more in South Africa and are exploring other sources,” he said.Nesi Chetty, fund manager at RMB Asset Management, said the N$1 billion sales target for organic clothing by 2012 was achievable.”Ultimately, they are building a brand over time and growth is exponential,” he said.Susman declined to divulge the margins on the organic line, saying the retailer never gave a breakdown of margins in different units.The group’s overall operating margins increased from 9.8 percent to 10.7 percent in the interim period to end-December.Susman said the retailer planned to launch its black economic empowerment (BEE) deal with staff by next month.The South African government has been encouraging companies to offer stakes to blacks and to accelerate employment equity in a bid to encourage them into the mainstream economy following their exclusion under white apartheid rule.”We will be rolling out an extensive BEE employee share ownership scheme in mid 2007, we have made preferential procurement a priority and we will work with our suppliers to help and encourage them in their own empowerment journeys,” Susman added.He declined to say how much the share plan would cost or give other details.Susman did not rule out also bringing in outside black investors as part of its BEE plan, but said the staff share plan was currently the primary focus.”The main focus at this stage is our staff, who we think would make fantastic empowerment partners,” he said.In driving transformation, Susman said the firm would also look at board diversity.In its 14-member board, Woolworths has one black executive director and two black non-executives.Nampa-ReutersWoolworths – which boosted revenue by 21 percent to N$8.97 billion rand for the 26 weeks to end-December – wants to boost its green credentials as part of its recently adopted, five-year strategy plan to 2012.The retailer said the plan centred on four key priorities: accelerating transformation, driving social development, enhancing its environmental focus, and addressing climate change.Susman told Reuters that outside of a small organic industry in South Africa, the major sources for organic products were in Uganda, Tanzania and India.”We can do some more in South Africa and are exploring other sources,” he said.Nesi Chetty, fund manager at RMB Asset Management, said the N$1 billion sales target for organic clothing by 2012 was achievable.”Ultimately, they are building a brand over time and growth is exponential,” he said.Susman declined to divulge the margins on the organic line, saying the retailer never gave a breakdown of margins in different units.The group’s overall operating margins increased from 9.8 percent to 10.7 percent in the interim period to end-December.Susman said the retailer planned to launch its black economic empowerment (BEE) deal with staff by next month.The South African government has been encouraging companies to offer stakes to blacks and to accelerate employment equity in a bid to encourage them into the mainstream economy following their exclusion under white apartheid rule.”We will be rolling out an extensive BEE employee share ownership scheme in mid 2007, we have made preferential procurement a priority and we will work with our suppliers to help and encourage them in their own empowerment journeys,” Susman added.He declined to say how much the share plan would cost or give other details.Susman did not rule out also bringing in outside black investors as part of its BEE plan, but said the staff share plan was currently the primary focus.”The main focus at this stage is our staff, who we think would make fantastic empowerment partners,” he said.In driving transformation, Susman said the firm would also look at board diversity.In its 14-member board, Woolworths has one black executive director and two black non-executives.Nampa-Reuters