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All Foschini wants for Christmas is…a trading uplift

By Angela Gonzalez-Rodriguez


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Management |ANALYSIS

The South African retail group is relying on Christmas trading to boost its full-year performance, as its bottom line remained flat for its half-year results.

Fashion retailer Foschini [JSE: TFG] reported its interim results for the period ended September 30 in early November, unveiling a 9.2 percent revenue jump. Its bottom line however was slightly down compared to last year’s. The group declared a dividend of 325 cents, up 1.6 percent from the previous year.

The group had to contend with difficult “political and economic” conditions in South Africa and the United Kingdom, two of the three major economies in which it operates.

“As always, the group is heavily dependent on Christmas trading which will largely determine our performance for the full year,” the group said in a note to shareholders.

This year, in January, The Foschini Group said that Christmas trading was above expectation, enjoying 14.6 percent sales growth for December. Growth for TFG International was 47.9 percent in pounds, becoming the largest growth of revenue for the group. TFG Africa sold 11.5 percent more than the previous year’s comparable period, while there was same-store growth of 5.6 percent.

Foschini to take over Australia in attempt to lift bottom-line

Australia, where the multi-brand conglomerate is invested with an ambitious plan to introduce home-grown brands to local consumers, is the group’s third key market. “We have identified one of our brands that we think would be a good fit and a bit of a disruptor for the Australian market. We can’t name the brand for commercial reasons but we are in advanced stages,” said TFG’s CFO Anthony Thunström.

It’s worth recalling that TFG, the owner of brands including Foschini, Exact, Markham, Fabian, and Due South, acquired Australia-based menswear specialist Retail Apparel Group (RAG) in May for 302.5 million Australian dollars, gaining a privileged entry point into Australia’s retail market.

During the period, the group through its wholly-owned subsidiary TFG Retailers in Australia, acquired the Retail Apparel Group (RAG). The agreement came into effect on July 24. The group’s acquisition of 14 G-Star RAW franchise stores in Australia, came into effect on April 3.

E-commerce remains strategic for The Foschini Group

TFG has kept at pace with its digitalization strategy, rolling out its e-commerce offering with the launch of @homelivingspace and Exact. The group currently has 17 brands trading online.

“E-commerce remains a key strategic focus area for the group,” assured the company in its corporate memo. However, Foschini has aggressively expanded its physical footprint as well, opening a total of 144 outlets in the period, 74 in TFG Africa, 46 in TFG London and 24 in TFG Australia.

Meanwhile, it shut down 77 underperforming outlets, most of them from its British subsidiary, TFG London. By the end of September, the group operated a total of 3 809 outlets in 32 countries.

Image:TFG Online

Foschini Group