Our clear market positioning for our brands Totalsports, Sportscene and DueSouth has ensured that we continue to achieve a leadership position within the respective retail sectors. We continue to actively seek market differentiation through product innovation, brand selection and continual updating of our respective retail environments.
Totalsports remains positioned as the premier sportswear destination in the country. With top performance brands complemented by fashion product, we offer the everyday athlete a world-class product offering that is well suited to their sporting needs. Our well-trained and knowledgeable staff offer the consumer a premium shopping experience in a revitalised retail environment. Our key sport strategy focusing on soccer, running, fitness and the newly-introduced studio category, ensure that we offer our customer a broad-range assortment incorporating sportswear and protective gear, thereby cementing our market leadership position.
Sportscene offers a blend of sport and fashion brands that are street relevant, providing the fashion-conscious youth with a unique fashion environment. This constantly evolving brand ensures market relevance by being part of the youth urban landscape through various initiatives that touch our consumer through their world. Our involvement in grassroots events, youth ambassadors and similar projects, ensures a fashion destination that is well accepted by our target market.
DueSouth caters for the modern, hi-tech, outdoor consumer who demands a clearly-differentiated retail environment suited to their outdoor lifestyle. We target mid to upper income outdoor lifestyle enthusiasts with a focused range of unique international adventure brands, complemented with own-fashion interpretations, constantly updating our range as part of our growth as a new brand. Our modern stores are well accepted by our customers, and are complemented by specialist staff, well trained in the latest technology and innovations that are part of the exciting outdoor lifestyle market.
The sports division is increasingly recognised as the key distribution channel for recognised international sports brands. The ongoing success of these international brands is key to our continued growth, whilst our in-house brands offer us both the margin flexibility and growth potential going forward.
| % change | % change | |||||||
| 52 versus | 52 versus | |||||||
| 2007 | 53 weeks | 52 weeks | 2006 | |||||
| Turnover | Sportscene | 386,3 | 14,3 | 16,9 | 338,0 | |||
| (R million) | Totalsports | 599,3 | 16,0 | 18,7 | 516,5 | |||
| DueSouth | 76,8 | 53,0 | 56,6 | 50,2 | ||||
| Total | 1 062,4 | 17,4 | 20,0 | 904,7 | ||||
| Number of stores | Sportscene | 86 | 8,9 | 79 | ||||
| Totalsports | 106 | 9,3 | 97 | |||||
| DueSouth | 16 | 14,3 | 14 | |||||
| Total | 208 | 9,5 | 190 | |||||
| Floor area | Sportscene | 17 296 | 12,3 | 15 408 | ||||
| (gross m2) | Totalsports | 25 925 | 8,6 | 23 878 | ||||
| DueSouth | 5 637 | 14,2 | 4 935 | |||||
| Total | 48 858 | 10,5 | 44 221 | |||||
| Number of employees | 1 613 | 9,5 | 1 473 | |||||
2007 delivered another successful trading year for the sports division realising a 20,0% comparable sales growth, and exceeding the R1 billion milestone. The key structural changes implemented previously have resulted in an increasingly focused business and delivered increased efficiencies in all brands. The appointment of merchandise managers responsible for each brand has allowed us to clearly manage and differentiate the respective brands. Our newly-formed visual merchandise department has ensured the showcasing of the latest product innovations and trends, in a world-class shopping environment. In addition, our technical trainers have helped to deliver improved customer service. These initiatives in conjunction with ongoing focus on key supplier relationships have ensured the continuation of significant growth for this division.
Comparable same store sales of 10,9% was again well above product inflation, and profit growth again outstripped turnover growth, largely due to tight expense management and margin improvements.
A new look (successfully implemented across 50 stores during the year), a continued focus on our key sports strategy, and an enhanced ladieswear offering, have resulted in a re-energised shopping experience and a good trading year.
Comprehensive and consistent product ranges, supported by sports-focused marketing campaigns, have ensured that our key sports of running, soccer and fitness are more clearly understood by our customers. Our sports clinics for our staff, have resulted in improved customer service, and instilled passion and technical skills into the business.
Following this strategy, Totalsports has achieved a significant turnover growth of 18,7% for the year, with an 11,8% same store growth. We continue to increase gross profit, through improved full-price product sales and input margins.
| 2003 | 2004 | 2005 | 2006 | 2007 | ||
| Markdown value (Rm) | 43,1 | 43,3 | 47,6 | 59,0 | 58,8 | |
| % to sales | 11,4 | 10,4 | 9,9 | 10,0 | 8,6 |
We anticipate that the markdown level will return to a more sustainable level of 10%.
Totalsports expanded aggressively this year, opening nine new stores and relocating and enlarging a further five stores. This growth in footprint positions us favourably for the new financial year.
Sportscene continued to cement its market leadership position by challenging our product offering and retail environment. We implemented a unique and relevant visual handwriting across all stores, and successfully communicated this message through innovative and exciting marketing campaigns. We believe our continued and direct involvement with our target market sets us apart from our competitors. We continually introduce “the now” brands into our product mix, ensuring market relevance and street credibility. We have continued to focus on expanding our own brand Redbat as well as ladies apparel and accessories, thereby allowing us to differentiate our business and offering further growth opportunities.
Following ten years of exceptional growth, the Sportscene brand continues to strengthen and gain market share. Comparable sales grew by 16,9% for the year, with 7,9% same store comparable sales growth. Our markdown to sales ratio, although higher than in the previous two years, remains at acceptable levels.
| 2003 | 2004 | 2005 | 2006 | 2007 | ||
| Markdown value (Rm) | 28,8 | 36,5 | 42,0 | 53,7 | 64,7 | |
| % to sales | 14,8 | 14,8 | 13,6 | 13,8 | 14,7 |
We anticipate a lower level of markdowns in the future, settling into the 12,5% – 13% range.
Sportscene continued its expansion drive, opening seven new stores during the year and enlarging a further two stores.
DueSouth is now recognised as a key player in the outdoor lifestyle market. A vastly improved product range, including a greater contribution from our DueSouth brand, and the introduction of new footwear and apparel brands, further differentiating us from our competitors, has been positively received by our customers. Considerable progress has been made in identifying the optimum product selection geared to the outdoor lifestyle enthusiast.
We aggressively marked down, and sold out of product that no longer fitted our brand positioning, resulting in our stores being far cleaner, better merchandised and more accessible to our customer.
We achieved a comparable turnover growth of 56,6%, and a very encouraging comparable same store growth of 23,7%. Our footprint now consists of 16 stores in key shopping locations around the country, having opened a further two stores during the year.
Totalsports will expand on the key sports strategy with the introduction of ladies studio and rugby as key sports. We continue to examine new store opportunities as they arise and have committed to a further seven new stores this year. Ongoing collaborative strategies with our brand partners in regards to the 2010 Soccer World Cup are at an advanced stage, with many initiatives under way. Our successful repositioning of the Totalsports brand will move to the next level, with increased above-the-line marketing exposure, thereby further entrenching our leadership position in the minds of our customer. We will focus on increased collaboration with international sports brands, who are paying more attention to South Africa, to address their unique needs.
Sportscene is undergoing a strategic review in terms of its marketing and retail handwriting, as is required by this fast-moving youth brand. Further initiatives are currently under way to ensure our market positioning and fashion relevance is ahead of our competitors. We will continue to leverage our market perception as being the leader in footwear offerings, as well as continuing to focus on the growth of our Redbat brand, which is being enhanced with the introduction of a revitalised denim offering. Our expansion continues with the opening of a further four stores this year.
DueSouth continues to establish itself within the outdoor lifestyle market as an innovative, contemporary, and hi-tech retail brand, in harmony with the aspirations of our customers. Relevance to our market is maintained with ongoing research as befits the growth of this new brand, ensuring we remain in touch with this growing market. The introduction of new brands, including Fox, enhances our current brand assortment, and complements the unique world-class brands available to our customers. Three new stores have been planned for this year.
| Projection | |||||||||
| Store statistics | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | ||
| Totalsports | 93 | 92 | 94 | 97 | 106 | 115 | 123 | ||
| Sportscene | 60 | 70 | 74 | 79 | 86 | 90 | 98 | ||
| DueSouth | – | – | 9 | 14 | 16 | 19 | 24 | ||
| Total no. of stores | 153 | 162 | 177 | 190 | 208 | 224 | 245 | ||
| Closures | 4 | 3 | 2 | 2 | – | 1 | 1 | ||
| Floor area (m2) | 33 343 | 35 691 | 40 643 | 44 221 | 48 858 | 52 509 | 57 114 | ||
The ongoing consumer confidence bodes well for our trio of well-positioned and exciting retail brands. We are confident that the structural changes undertaken in the previous year will ensure that the trading challenges will be met and our position of market dominance maintained. The revisiting of the relevant brand positioning has ensured that strategies and staff effort is aligned to take full advantage of the growth experienced in our sector. Ongoing focus remains in leveraging 2010 and beyond, and we are confident that our status as the preferred retail channel for all our key sport partners, offers us unprecedented opportunities going forward.
Expansion of the store footprint will be concentrated around the demographics of our target market, including all regional and major malls and rejuvenating city centres for Totalsports and Sportscene. DueSouth will continue its focus only on major malls.
