Our opinion on the current state of TFG
The Foschini Group (TFG) is a prominent international retailer with 28 fashion brands and 4083 trading outlets across 32 countries. TFG's successful expansion into Australia with the Retail Apparel Group (RAG) acquisition in 2017 (for over $300 million) sets it apart, as many South African retailers, such as Woolworths, have struggled in that market. TFG has maintained RAG’s success by allowing its Australian management team autonomy rather than attempting to manage it from South Africa.
Historically, TFG has maintained strong performance in South Africa’s highly competitive clothing retail industry, despite challenges from both international brands and local retailers.
In its year-end results to 31st March 2024, TFG reported:
- Revenue up 8.9%
- Headline earnings per share (HEPS) up 0.2%
- Cash retail turnover up 9.9%, making up 82.3% of total retail turnover
- Online retail turnover up 22%, contributing 9.9% to group retail turnover
- Gross profit increased by 8.6% to R27 billion
In a trading update for the 21 weeks to 24th August 2024, TFG saw a 3.5% decline in sales but reported a 100-basis point increase in gross margin. Key growth areas included:
- Online sales up 7.8%, now 10.8% of total sales, driven by a 42.7% increase in South Africa via the Bash platform
- Cash sales contribute 73% to TFG Africa sales and 81.2% to total group sales
TFG’s diversification overseas offers a significant rand-hedge advantage, balancing the effects of South Africa's economic cycles. The company has demonstrated resilience and effective management, especially as the share entered a new upward trend in June 2023 despite challenges like rising interest rates and loadshedding. We consider TFG one of the best-managed retail clothing companies and a solid long-term investment, suitable for accumulation on weakness.
On 27th October 2024, TFG announced the acquisition of White Stuff, a UK fashion and lifestyle retailer, furthering its international diversification.
Historically, TFG has maintained strong performance in South Africa’s highly competitive clothing retail industry, despite challenges from both international brands and local retailers.
In its year-end results to 31st March 2024, TFG reported:
- Revenue up 8.9%
- Headline earnings per share (HEPS) up 0.2%
- Cash retail turnover up 9.9%, making up 82.3% of total retail turnover
- Online retail turnover up 22%, contributing 9.9% to group retail turnover
- Gross profit increased by 8.6% to R27 billion
In a trading update for the 21 weeks to 24th August 2024, TFG saw a 3.5% decline in sales but reported a 100-basis point increase in gross margin. Key growth areas included:
- Online sales up 7.8%, now 10.8% of total sales, driven by a 42.7% increase in South Africa via the Bash platform
- Cash sales contribute 73% to TFG Africa sales and 81.2% to total group sales
TFG’s diversification overseas offers a significant rand-hedge advantage, balancing the effects of South Africa's economic cycles. The company has demonstrated resilience and effective management, especially as the share entered a new upward trend in June 2023 despite challenges like rising interest rates and loadshedding. We consider TFG one of the best-managed retail clothing companies and a solid long-term investment, suitable for accumulation on weakness.
On 27th October 2024, TFG announced the acquisition of White Stuff, a UK fashion and lifestyle retailer, furthering its international diversification.
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