TFG to add six stores in Australia
TFG plans to open six stores in Australia under one of its South African brands in October, says group CEO Doug Murray.
TFG plans to open six stores in Australia under one of its South African brands in October, says group CEO Doug Murray.
“For competitive reasons, we’re not saying which [brand], but we’ve already got stores signed up,” Murray, who will step down as CEO in September, told Business Day.
The TFG Australia business, which comprises the recently acquired Retail Apparel Group (RAG) and some G-Star Raw outlets, was performing better than expected and new stores were planned, Murray said.
“RAG is really trading well…. For the eight months we had it, turnover growth was up just over 14%,” he said. Trading since the end of TFG’s financial year to March had been “ahead of expectation – and we expected a similar level of growth”.
“So we’re very thrilled with RAG’s results, and that’s not driven by any obscene markdowns. Gross profit is growing at a faster rate.”
The owner of the Markham and Foschini brands said on Thursday group turnover rose 21.4% to R28.6bn in the year ended March. Headline earnings were up 9.6% at R2.5bn.
However, the group’s share price closed 7.4% lower at R180 as the result was below market expectations, said Bjorn Samuels, an equity analyst at Argon Asset Management.
Meanwhile, Murray said TFG London, which includes Phase Eight, Whistles and the recently acquired Hobbs brand, was “running ahead of our expectations as well”.
“Their big focus this year is now getting shared services across the three brands and getting a TFG London platform. That will put us in a position where, like in SA or Australia, bolt-on acquisitions will be very doable. In the UK, once we get the back office platform in place, and that’s started, there’s a lot of good businesses and brands there that we can bring our model to.”
Murray said online sales now contributed 33% of TFG London’s sales, 3.5% of sales in Australia and just 1% of sales in SA.
The group aimed to “digitise” the South African business by boosting online sales and using technology to have “a single view of the customer”, in addition to other uses. Online sales in SA could reach “5% to 10% over the next few years”.
Samuels said TFG Africa’s clothing division was performing better than its listed peers, and the recent court ruling concerning SA’s affordability regulations could boost credit growth at TFG Africa.
“We believe TFG is the better positioned apparel retailer in SA, given its diverse portfolio of brands which serves customers across the various [living standards] groupings,” he said.