The Foschini Group delivered retail turnover growth of 14.3% achieved in the fourth quarter of financial year 2023 despite load shedding challenge. Photo: Armand Hough/ African News Agency (ANA)
The Foschini Group (TFG) said yesterday it had had lost nearly 700 000 hours of trading due to load shedding in South Africa, which shaved off retail turnover by in excess of R1.5 billion for the financial year 2023.
As a result the retailer was defending its gross margin and was in a consolidation phase as it slows down its store roll-outs and tightens up expenditure.
In a trading update for quarter four (Q4) for the financial year 2023 and the 12 months ended March 31, 2023 it said TFG Africa lost, conservatively, 360000 trading hours during the 12 months ended March 31, 2023 ( FY2023).
“The true impact, however, has been estimated at more than double this figure (ie 730 000 lost trading hours) as customer demand is dampened by the associated disruption and inconvenience with reduced footfall observed before, during and immediately after load shedding periods.
“We estimate the financial impact of load shedding to have reduced TFG Africa's retail turnover by in excess of R1.5 billion in FY2023, with a concomitant impact on inventory provisioning, which ultimately impacts on gross margins achieved,” TFG said.
However, to shore up its operations the group said it had invested R200 million in alternative power solutions. As of March 31, 2023, 1 875 stores had back-up power, representing 75% of TFG Africa's retail turnover, with plans to ensure the majority of its key stores had the back up power in place over the next few months.
Despite this, TFG delivered retail turnover growth of 14.3% achieved in the fourth quarter of financial year 2023 (Q4 FY2023) compared to the same period last year, despite the unprecedented levels of load shedding experienced in South Africa and global macroeconomic challenges.
This as the group delivered retail turnover growth of 19.4% for the 12 months ended March 31, 2023.
TFG Africa recorded retail turnover growth of 15.6% (6.0% excluding Tapestry) in Q4 FY2023 from the prior comparative period, which was negatively impacted by the high levels of load shedding experienced in Q4 FY2023. It posted 16.9% growth in first half FY2023 from second half 17.4% FY2023.
The retailer said it continued to grow ahead of the market during Q4 FY2023 and the 12 months ended March 31, 2023, further expanding market share by 0.3% in respect of both these periods, for those categories reported.
“Given the superior growth of TFG's Sports Division and the acquisition of Tapestry Home Brands (neither reported via RLC), TFG Africa further entrenched its footprint, customer base and market leadership positions in all its key categories,” it said.
TFG said in light of the current load shedding and global economic uncertainties it was adopting a very prudent approach and treating financial year 2024 as a year of consolidation and focusing on improving operating leverage.
There would be a continued focus on controlling inventory purchases next year so as to defend gross profit margins and reduce the absorption of working capital, with next year’s inventory purchases expected to be below those of 2023 on a like-for' like-basis.
TFG said, “We also revisited our planned capital allocation for the year ahead, and have curtailed our planned new store openings, with the result that our store capital expenditure is likely to approximate half of what we spent in FY2023. TFG's future brand and store roll-out pipeline remains as robust as ever, however, current market conditions require a slower execution of this roll-out,” it said.
By 4pm the share was -0.82% lower at R88.29.
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