Foschini Group sales outshine competitors
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.