Fos­chini Group sales out­shine com­peti­tors

The Star Early Edition - - BUSINESS REPORT - Ka­belo Khu­malo and Reuters

SHARES in The Fos­chini Group (TFG) leapt by more than 5 per­cent yes­ter­day af­ter the re­tail com­pany re­leased a bet­ter-than-ex­pected trad­ing up­date.

Re­tailer TFG cashed in on sales dur­ing the fes­tive pe­riod, boosted by its re­cent ac­qui­si­tions in the UK.

The com­pany’s over­all sales went up 14.6 per­cent for the pe­riod from Novem­ber 26 to De­cem­ber 26.

The group said yes­ter­day that it had achieved a 47.9 per­cent in­crease in sales in the UK, while growth for the com­pany’s Africa oper­a­tions saw an in­crease of 11.5 per­cent in the same pe­riod.

The cloth­ing and home­wear re­tailer ex­panded in de­vel­oped mar­kets as a weak econ­omy, tighter credit rules and tough com­pe­ti­tion ham­pered growth in its home mar­ket.

The com­pany has made two key Bri­tish ac­qui­si­tions in re­cent years. In 2015 the firm ac­quired UK-based re­tailer Phase Eight for £140 mil­lion (R2.3 bil­lion). Last year the group added an­other UK re­tailer, Whis­tles, to its sta­ble for an undis­closed amount. South African re­tail­ers have in­creas­ingly looked to the UK and Europe to re­duce their reliance on the fluc­tu­at­ing rand.

Fos­chini’s ri­vals Wool­worths and Tru­worths have also made sim­i­lar for­ays into Euro­pean mar­kets.

Ian Cruick­shanks, the chief econ­o­mist at the SA In­sti­tute of Race Re­la­tions, said the UK mar­ket pro­vided South African re­tail­ers with rev­enue growth.

“While Fos­chini’s in­ter­na­tional sales are up, what is clear is that the im­prove­ment in its in­ter­na­tional sales was due to im­prove­ment in the rand ex­change rate against ster­ling, it has surely en­hanced the sales pic­ture,” Cruick­shanks said.

Fos­chini’s mer­chan­dise cat­e­gories all saw growth in sales for the pe­riod. The group’s Africa cloth­ing oper­a­tions in­creased by 12.8 per­cent while its home­wares arm recorded an in­crease in sales of 10.4 per­cent and its cos­met­ics de­part­ment’s sales rose 5.4 per­cent.

The group’s cell­phone arm saw an in­crease of 15.8 per­cent. Its cash sales for the pe­riod rose by 17.7 per­cent while its credit sales grew 5.2 per­cent.

A sim­i­lar pic­ture car­ries through to the group’s sales for the nine months to the De­cem­ber pe­riod. TFG’s trad­ing up­date is more up­beat than those of its South African com­peti­tors, who are strug­gling to grow sales in an econ­omy fore­cast to have ex­panded by less than 1 per­cent last year.

TFG shares rose 5.29 per­cent to close at R168.50 yes­ter­day.

PHOTO: LEON NI­CHOLAS

Fos­chini store in Sand­ton City. Fos­chini saw growth in sales in the past three months.

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