Gavin Tipper, the chairperson of AVI, the South African food producer and fashion retailer, says the group’s results for the remainder of the 2023 financial year remain materially dependent on sound consumer demand over the festive season and through the second semester.
At the annual general meeting of AVI held on Wednesday, and yesterday flagged on the Stock Exchange News Service, Tipper gave an update on the firm in the quarter ended September 2022.
He said the trading environment had remained challenging with inflationary pressures and the weak macro environment reducing consumer spending.
Consolidated operating profit was 2.1% higher than the same quarter in the prior year. AVI’s branded consumer business, excluding I&J, improved operating profit by 9.5% over the same period last year.
Tipper said severe load shedding and supply chain disruptions following Transnet’s strike had been managed effectively, but at a cost to revenue and margin.
Revenue for the quarter rose by 9.7% and revenue growth was seen in all major categories, except its fish and frozen food business, I&J, where poor catch rates and an unfavourable abalone sales mix knocked the quarter’s revenue.
Higher selling prices in some categories impacted short-term sales volumes, with an ongoing focus on long-term margin protection in the face of inflation, AVI said.
However, revenue and margin in the footwear and apparel business, with brands including Spitz, Carvela, Kurt Geiger, Lacoste, Gant and Green Cross Shoes, continued to improve, assisted by volume gains, partially because of the non-recurrence of the disruption as a result of the unrest in July last year.
AVI said its consolidated gross profit margin declined marginally with accumulated cost pressures not fully recovered as its businesses tried to find the best balance between volume and value in a volatile environment.
Selling and administrative expenses increased at rates above inflation, partially due to the impact of a substantially higher fuel price on distribution costs, the timing of marketing investment, and the impact of fair-value accounting on the group’s hedge positions.
BUSINESS REPORT