Foschini opened 199 new stores in the six months to September 30, 2023 Photo: Leon Nicholas
The Foschini Group achieved record turnover in the six months to September 30, up by 12.9% to R28.4 billion, and declared an interim dividend of 150 cents (170 cents) per share.
The pleasing performance over the six months was in an environment of tough trading conditions and against a comparative high base in the same period a year before due to the resumption of clothing demand after the Covid-19 pandemic.
The period was also impacted by rising interest rates, high inflation and, in South Africa, taxi strikes and flooding in the Western Cape, as well as sustained load shedding.
Earnings per share fell 15.4% to 393.6 cents a share. Trading expenses as a percentage of group retail turnover improved to 41.9% from 42.3%. Gross profit was up 7.7% to R12.5bn.
TFG Africa’s retail turnover was up 17.3%. Online retail turnover increased by 23.9%, contributing 9.8% to group retail turnover, the growth largely attributable to strong growth in South Africa.
The share price surged 4.29% to R106.46 on the JSE late Friday afternoon.
“These results demonstrate the strength and resilience of our businesses, despite the challenging macro environment, and our leadership teams’ keen focus on managing our cost base. We saw healthy turnover growth, driven by the expansion of our footprint and brand portfolio, with particularly strong online sales growth in South Africa,” said chief executive Anthony Thunström.
TFG Africa’s retail turnover growth was driven largely by the clothing and homeware categories. The double digit growth was in spite of higher unemployment rates, reduced consumer confidence and load shedding – about 287 000 trading hours were lost in the first half due to load shedding, which further impacted gross margins through inventory clearance.
TFG London and TFG Australia’s performance was against an unsustainable prior period, due to the buoyant sales in the post Covid-19 trading period.
TFG Australia’s retail turnover fell 7.2%, due also to the impact of higher inflation and interest rates on customer demand. Retail turnover in TFG London fell 10.5%, but gross margin was maintained.
Due to continued consumer pressure, cost inflation was absorbed and additional promotional activity was undertaken to manage inventory and increase market share gains.
“We remain confident in the execution of our strategy and are well positioned to leverage the diversity of our group to see us through the tough trading cycle.,” said Thunström.
Cash retail turnover increased by 14.6%, contributing 82% to group turnover. Credit turnover grew 3.5%, with credit extension consciously curtailed in light of the difficult consumer environment.
Online retail turnover increased by 23.9% and contributed 9.8% to total group retail turnover. TFG Africa’s online retail turnover growth increased a remarkable 56.5%, driven by the focus on diversification of brands and omnichannel retailing.
“Our online shopping platform, Bash, has already begun to make a significant impact on our sales growth as well as broadening the total online offer for customers. The consolidation of all our Africa retail brands on this platform and app provides our more than 35 million customers with the number one local fashion retail app,” said Thunström.
During the six months TFG opened 199 new stores. Following the acquisition of Street Fever, an independent retailer of affordable branded footwear and apparel, 91 Street Fever outlets were consolidated into Sneaker Factory. This has allowed TFG to quickly scale the Sneaker Factory business to 219 stores.
TFG’s directors said they expected trading conditions and consumer confidence would remain under pressure, but the group was clear about its strategy as it entered the important Black Friday and Christmas festive season trade.
“We will continue to focus on the consolidation of our world class retail assets to further improve our balance sheet strength and position our business for sustained future growth,” said Thunström.
BUSINESS REPORT