@ home

  2008 % change 2007
Turnover (R million) 458,0 11,1 412,4
Number of stores 61 19,6 51
Floor area (gross m2) 23 679 8,1 21 906
Number of employees 756 (10,8) 848

Positioning

This division has two store formats. The first and older comprises @home stores, which have since the launch of the division in 2001 successfully sold a wide range of homeware. The second is the more recently developed @homelivingspace category, which sells contemporary furniture and larger décor items for the home, as well as the full @home offering.

Despite having only been launched in 2006, @homelivingspace has been well received in the marketplace and is already making a useful contribution to profitability.

The division targets the middle to upper segment of the market in the form of the LSM 8 – 10 group.

There were 61 stores at the year-end, located in leading retail malls in the major urban centres of the country.

Review of the year

Ten new stores were opened in the year under review in keeping with the division’s long-term roll-out programme. Of the new stores, nine are @home stores in Johannesburg, Pretoria, Cape Town and Durban. The tenth is an @homelivingspace store of 2 000 square metres in Loch Logan, Bloemfontein, and is only the third @homelivingspace store to be opened in South Africa. A fourth opened in Port Elizabeth during May 2008.

In January 2008 the division opened its first overseas stores, one in Dubai and the other in Bahrain. This represents a joint venture on a franchise basis between the group and a Dubai-based company, the Al Tayer Group LLC. The performance of these pioneering stores in their first few months of operations has been ahead of expectations.

This is the division’s first foray outside South Africa and represents a milestone in its development. If it lives up to the promise embodied in its first few months of operations some other opportunities on the horizon may be pursued.

The homeware market has, in common with other consumer goods markets in South Africa, felt the pinch of the slow-down in consumers’ spending that has resulted from rising interest rates and rising inflation and the generally tightened economic conditions that prevailed in the latter part of the year under review. Despite this, total turnover for the division rose by 11,1% although same store turnover remained flat. In the present phase of its existence the chain is at the point where new stores in the chain are being opened in relatively close proximity to older stores, drawing away some trade from established customers. This is likely to be only a temporary levelling process pending the build-up of independent customer and turnover bases.

As is shown in the table below, markdown was somewhat higher than in the preceding years, but it remains under 10% of sales and is considered to be acceptable for a moderately difficult trading year.

  2004 2005 2006 2007 2008
Markdown value (Rm) 16,5 16,0 27,1 39,3 47,3
% to sales 8,0 5,6 7,5 8,3 9,0

The division’s trading density for the year amounted to an acceptable R22 290 per square metre.

Strategy

Plans for the coming year include the roll-out of another eleven stores in South Africa, of which four will be @homelivingspace stores and seven @home stores. The Sandton store will be revamped and enlarged, and revamps will also take place at the V&A Waterfront and Canal Walk stores in the Western Cape. These are among the division’s prime locations. The revamps will include the addition of a décor element.

The slowdown in the economy presents a challenge for the division to excel in bringing desirable ranges of high-quality and well-priced merchandise to its customers. In-store, the division’s operations teams will remain focused on rendering superior customer service.

In the United Arab Emirates the @home franchised stores will be supplemented by the opening of a further three outlets, bringing the number in this zone to five. This will give a meaningful boost to the division’s drive into new territory.

Prospects

The division remains focused on retaining its margins and profitability and tight control of expenses will be essential.

Unabated efforts are being made to find suitable trading sites to meet growth requirements for both @home and @homelivingspace stores.

Despite the current economic downturn, the further roll-out of both @home and @homelivingspace stores will underpin this division’s performance in the future.

Store statistics 2004 2005 2006 2007 2008*
@home 24 34 39 49 58
@homelivingspace – – 2 2 3
Total No. of stores 24 34 41 51 61
Closures – – – – –
Floor area (m2) 10 001 13 405 18 624 21 906 23 679
         
                Projection
Store statistics 2009* 2010*
@home 65 70
@homelivingspace 7 10
Total No. of stores 72 80
Closures – –
Floor area (m2) 35 000 43 500
* Excludes franchise stores.