I met the new CEO of Groupon South Africa yesterday. Emilian Popa is as interesting as his name exotic. MBAs from both Columbia and London Business Schools, he’s a bit of an Internet startup veteran. Popa returned to the company he left soon after helping his two former partners get it off the ground. They’ve served out a three year lock-in period and Groupon International decided to take a tighter hold. Through Popa’s appointment and aligning the local operation with the global strategy. Groupon SA has had a patchy record growing fast and then shrinking to around 100 staffers. It became the country’s biggest online advertiser in 2012 after investing R70m to harvest a claimed 5 million clients. Also Popa reckons it’s the country’s biggest online retailer.
That got me thinking. So Groupon, with a R45bn market cap on NASDAQ, is taking South Africa seriously. Ditto Kalahari.com, the online retailing offshoot of the R500bn Naspers Group. Adding to the spice is Takelot.com, run by Naspers old boys with R1bn in funding from one of the Robertson Tiger Funds. All three aim to shake up the local retailing market and have the bullets to do so. On the other side, investors are pricing traditional retailers for near perfection. Shoprite, Woolworths and Mr Price trade at around 24 times their most recent annual profit. Pick n Pay, which is going through a turnaround, trades at over 40. Those are rich ratings in any circumstances. Exceedingly generous when a new competitor has just ridden into town. Let alone three.
It reminds me of the wonderful Ernest Hemingway description about the way a man goes bankrupt: “Slowly, and then suddenly.” Newspapers never saw the internet coming and are paying the price. Today’s investors in retail stocks might one day be accused of similar myopia.
Yesterday’s top stories:
Can the JSE head upwards forever? (Spoiler – it can’t)
64 years later, a new Brazil hosts the World Cup
As some high-risk assets take a hit, investors fear worse is to come for world financial markets
Clawing money back from SARS: R&D tax incentive works 150% – tax expert
Analyst looks at Telkom, BCX and SA’s ICT sector
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