Big growth plans

Even in the best of economic times it takes confidence and nerve for a company to present a five-year forecast.

The Foschini Group (TFG) has done just that.

TFG has set itself stiff targets for growth in the five years to March 2021. The retailer is looking to increase sales by 85% to R39bn, to lift operating margin from 17% to as high as 19% and return on equity from 23.9% to 28%-30%.

If TFG achieves its 2021 sales target and a margin of 18% it implies an average annual 14.4% rise in operating profit to just short of double its level in the year to March 2016.

“Barring an economic calamity we view our targets as very attainable,” says TFG financial director Anthony Thunstrom. “They are derived from projections made by each brand and are probably conservative. Targets set over the past eight years have all been exceeded.”

TFG showed its form in its latest year, lifting headline EPS (HEPS) 17.6%. It put TFG marginally ahead of Mr Price, which reported a 17.1% HEPS rise over the same period.

For TFG, its past year was one of bedding down UK-based fashion retailer Phase 8 (acquired for £140m in January 2015).

“Integration is the make or break of an acquisition,” says Thunstrom. “Phase 8’s management has done everything we asked them to do. The integration could not have gone more smoothly.”

While Phase 8 contributed R3.6bn (17%) to group retail sales of R21.1bn, its contribution to