Cashing in on diversity
THE DIVERSIFIED Foschini Group, with merchandise categories including clothing, jewellery, cosmetics, homeware and furniture, produced its highest ever profits and realised further gains in market share for the year ended 31 March 2013. The retailer increased its trading reach, opening a further 146 stores to bring its number of outlets to 1 979 including those in Namibia, Botswana, Lesotho, Zambia, Swaziland and Nigeria. It will also expand into Mozambique, Angola and Ghana.
But mind the debt trap. The counter’s retail debtors book increased by 14% to R5.2bn while the active account base grew by 6.0% to 2.6m accounts and further, its net bad debt as a percentage of closing debtors book increased to 10.5% from 9.4% in the previous year, moving from 10.3% at the half-year. However, the group’s management says this remains well within its expectations.
With a long-term investment view, it would be more than reasonable to expect further upside from this play.