Monday, January 24

The Foschini Group recovers from the devastation of Covid and the wave of looting in July

In what must surely be classified as the most disruptive business period in its history, the Foschini Group (TFG) had to deal with the Covid closures and then the looting of 198 of its stores in KwaZulu-Natal in July which is estimated to have it cost R400. million in lost revenue.

Some 145 of these looted stores reopened at the end of September, and another 22 will reopen in December 2021.

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The rest will only reopen from 2022 due to the extensive structural damage caused.


Large SA retail chains compete to restock looted stores [Jul 16]
TFG: 198 stores looted and damaged remain closed [Aug 3]

TFG Africa lost around 7% of its business hours due to a combination of Covid-related store closures, riots, and loss of cargo.

This was slightly better than London stores, which lost around 9% of trading hours due to closures and trade restrictions, and TFG Australia, where a whopping 25% of trading hours were lost as a result of imposed closures. by the government.

Read: TFG London closes 148 points of sale [Nov 2020]

These factors make the recovery reported on Thursday even sweeter.

The numbers

Despite the setbacks, TFG announced a 47.1% increase in revenue to R20.4 billion during the six months to September 2021, and a 64% growth in gross profit to R9.3 billion. South Africa accounted for 69.4% of the group’s retail revenue, with 15.3% each from London and Australia.

The group comprises about 4,300 stores in 25 countries, of which almost 3,000 are in Africa.

183 new points of sale were opened during the period, while 173 were closed.

Several other factors contributed to the improvement of the commercial position: better customer payment behavior, which resulted in a 4.8% decrease in the net debtor book to R6.5 billion, and market share gains of 4.8 % in the Men and Women categories, according to the Retail Liaison Committee.

The group claimed a total of R613 million from the South African Special Hazard Insurance Association (Sasria) in connection with the July looting, and has so far received two payments: R200 million, reflected in the current reporting period, and other R263 million emails. the end of the period. More insurance payments are expected in the second half of the financial year.

Consolidated balance

The focus on controlling costs and reducing its cost base continued during the period under review, with tangible savings derived from ongoing business optimization projects.

The group used the improved business performance to strengthen its balance sheet, with a further reduction in net debt from R1.3 billion in March 2021 to R0.8 billion.

Inventory increased just 2.5% from the March 2021 figure, showing strict working capital management.

Read: TFG opens a new clothing factory in Joburg for the hearing impaired

Business expenses increased 39.9% compared to the prior period, although this was partly due to the impact of Covid-related rental concessions and various types of government assistance received in the prior period, as well as the impact on the current period of the Jet acquisition and continued strategic investments in local manufacturing and technology, says Sens’s announcement posted Thursday.

Trading expenses as a percentage of the group’s retail turnover improved to 43.7% in the current period from 47.4% in the prior period.

Demand for new accounts increased 55% during the period due to a revived marketing push, although only 25% of these were approved, in line with management’s conservative risk parameters.

Basic earnings per share and overall earnings per share increased 116.3% and 572.2%, respectively.

The group decided to resume dividend payments, announcing an interim dividend payment of 170 cents per share.

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