AVI sees pockets of resilience

AVI, the owner of Spitz shoes, Romany Cream biscuits, and I&J Fish, says consumers are struggling and it cannot always pass on cost increases. However, it saw volume growth in fashion brands, including Green Cross, Spitz and Gant, that are aimed at higher-end consumers.

AVI, the owner of Spitz shoes, Romany Cream biscuits, and I&J Fish, says consumers are struggling and it cannot always pass on cost increases.

However, it saw volume growth in fashion brands, which include Green Cross, Spitz, and Gant aimed at higher-end consumers who may have the resilience needed for the current economic challenges.

Woolworths also reported growth in clothing sales over December while the sales update from Mr Price painted a picture of weaker financial health in its middle-class cashbased customer base.

However, AVI’s overall operating profit was only 1.7% higher than last year due to I&J’s earnings declining.

It did not report any increased sales at its snack brands include Baker Street biscuits such as Romany Creams, and House of Coffees with growth explained fully by price increases as it raised prices to offset input cost pressures.

Fishing division I&J’s revenue fell 2.3% with lower catch rates and the re-emergence of lockdowns in China and Hong Kong affecting the abalone sales mix for the semester.

AVI said higher inflation, interest rates and unemployment continue to constrain consumer spending.

“While we have strong and resilient brands, affordability is a growing constraint for consumers, limiting their ability to digest higher prices,” it said.

Thanks to improved footwear and apparel profitability and the purchase of Exclamation and Gravity trademarks from Coty, it saw much higher gross profit margins.

It noted that record levels of load-shedding negatively affected its manufacturing, distribution and retail operations. Backup power it had invested in over the years had a significant cost.

“While the indirect costs of chronic load-shedding are difficult to quantify they are significant, exacerbating the complexity this imposes on our operations, supply chains, and distribution logistics.”

The share price was 3.25% down at R72.56 at midday.