The Foschini Group Limited (TFG) reported record financial results for the year ending March 31, 2024. Revenue surged by 8.9% to R60.1 billion. Retail turnover increased by 8.6% to R56.2 billion, demonstrating the group’s resilience in tough market conditions.
Strong Performance in TFG Africa
TFG Africa posted a retail turnover growth of 10.4%. This growth was supported by market share gains across all major merchandise categories. The online retail sector also showed robust growth. Online retail turnover increased by 22.0% to R5.6 billion, driven largely by the Bash platform in South Africa.
Robust Cash Retail Turnover
Cash retail turnover rose by 9.9%, now contributing 82.3% to the total retail turnover. TFG’s gross profit climbed by 8.6% to a record R27.0 billion, maintaining a strong margin of 41.1% in the second half of the year.
Profit and Earnings
Operating profit before finance costs rose by 9.9% to R5.9 billion. Headline earnings increased by 0.8% to R3.1 billion, while basic earnings per share (EPS) slightly declined by 0.4% to 934.7 cents. Headline earnings per share (HEPS) edged up by 0.2% to 970.7 cents.
Financial Performance by Segment
TFG’s diverse geographic footprint saw mixed results across its regions. The table below summarizes the financial performance by business segment.
| Segment | H1’2024 vs H1’2023 | H2’2024 vs H2’2023 | FY2024 vs FY2023 | FY2024 Contribution to Group Retail Turnover |
|---|---|---|---|---|
| TFG Africa | 17.3% | 5.1% | 10.4% | 69.7% |
| TFG London | 6.3% | 14.6% | 10.4% | 13.6% |
| TFG Australia | 0.7% | 0.0% | 0.3% | 16.7% |
| Group Total | 12.4% | 5.4% | 8.6% |
TFG Africa’s notable performance was driven by strong sales in clothing, sportswear, and womenswear categories. The acquisition of Tapestry Home Brands in the previous year also contributed to this growth.
Effective Inventory Management
TFG managed to reduce its group inventories by 11.6%, compared to the elevated levels seen in the previous year. The reduction was due to improved working capital management and effective inventory control.
Increased Cash Generation
Cash generated from operations soared by 76.5% to R12.5 billion, enabling the company to fund growth, acquisitions, dividends, and debt repayment. Pre-IFRS 16 net debt declined by 31.3% to R4.9 billion, reflecting a healthier financial position.
Dividend Declaration
TFG declared a final gross cash dividend of 200.0 cents per ordinary share, an increase of 33.3% from the previous year. The dividend will be payable on July 22, 2024, to shareholders on record as of July 19, 2024.
Preference Share Dividend
TFG also declared a gross preference dividend of 3.25% or 6.5 cents per share for the period ending September 30, 2024. This dividend will be payable on September 16, 2024, to preference shareholders on record as of September 13, 2024.
Segmental Performance Insights
TFG Africa
TFG Africa’s retail turnover was driven by a 14.1% increase in clothing sales during the first half of the year. Homeware sales surged by 62.8% in the first half but moderated to 4.2% in the second half.
| Merchandise Category | H1’2024 vs H1’2023 | H2’2024 vs H2’2023 | FY2024 vs FY2023 | FY2024 Contribution to TFG Africa Retail Turnover |
|---|---|---|---|---|
| Clothing | 14.1% | 6.2% | 9.7% | 72.5% |
| Homeware | 62.8% | 4.2% | 25.0% | 13.6% |
| Cosmetics | 4.5% | 4.9% | 4.7% | 2.6% |
| Jewellery | 1.8% | -0.1% | 0.7% | 3.7% |
| Cellphones | 5.1% | -0.3% | 2.3% | 7.6% |
Credit Retail Turnover
Credit retail turnover grew by 2.8%, contributing 25.4% to TFG Africa’s total retail turnover. The debtors’ book grew by 7.5% to R8.3 billion.
Acquisitions and Strategic Investments
TFG acquired Street Fever, integrating 91 stores into Sneaker Factory, which now boasts 213 stores. This acquisition aligns with TFG’s strategy to expand its footprint and brand portfolio.
TFG London and TFG Australia
TFG London’s retail turnover declined by 4.2% in GBP terms due to economic pressures in the UK. Despite this, online retail turnover improved, now making up 42.7% of TFG London’s retail turnover. TFG Australia faced similar challenges, with a 5.6% decline in retail turnover in AUD terms.
Supervisory Board Changes
The board saw significant changes, including the appointment of Jan Potgieter and Nkululeko Sowazi as independent non-executive directors. Bongiwe Ntuli resigned as CFO, with Ralph Buddle taking over the role from April 1, 2024.
Outlook
TFG remains cautious due to challenging macroeconomic conditions. The group has reduced stock holdings and net debt to strengthen its balance sheet. Strategic investments, including the Riverfields Distribution Centre, position TFG for future growth.
Continued Investment
TFG continues to invest in key strategic initiatives to enhance its differentiated business model. The group remains focused on capturing additional market share and seeking high-quality acquisitions.
Financial Stability
With a robust balance sheet and diversified business model, TFG is well-positioned to navigate economic challenges and pursue growth opportunities.
Conclusion
The Foschini Group’s record revenue and strategic initiatives highlight its resilience and adaptability. Despite economic headwinds, TFG continues to deliver strong financial performance and growth prospects.