Woolworths buys Politix

A relatively small announcement yesterday from one of our core holdings, Woolworths. Now remember that if you have been a shareholder for more than a few seconds, you would have been involved in the rights issue in which the company issued more shares in order to part fund the purchase of department stores in Australia, they are becoming a bigger clothing business. Fashion, at the top end of what is normal. This is not a 500 Dollar pair of leather shoes kind of market, this is the market where the shopper is undoubtably rich, not at the level of extreme luxury though. And the purchase yesterday confirms and rubber stamps that line of thinking (WTF, you can't stamp a line?).

The company announced yesterday that they were acquiring a menswear line in Aussie, a brand called Politix. It is not big, sales of 56 million Aussie from their 75 stores (including 31 concessions across Australia) is not going to be an immediate changer, that is 585 million Rand in annual sales. Not nothing. Woolies had annual sales of 66.9 billion Rand. This is less than 1 percent of total sales, if they can ramp the brand across all of their locations in the Southern Hemisphere, it will get bigger. At first glance a blazer from the website costs around 250 to 370 Dollars, Aussie. 3800 Rand at the top end of the range for a blazer. The Country Road jackets in Aussie are more expensive, I was wrong on my initial thinking that they were "more premium".

Does this move the needle? No. Is this part of the long term trend of trying to identify good brands that will grow revenues at the fringes? Yes, and all of this creeps up on you.