Foschini shares rally on record annual profit
THE Foschini Group stock price rallied yesterday to close 2.7% higher at R111 on the JSE after the group reported an 11.2% rise in headline earnings per share to 858.6c for the year ended March.
CEO Doug Murray said the group had achieved a “solid set of results” against the backdrop of volatile and difficult trading conditions, especially over the festive season.
The company increased its retail turnover 10.9% to R12.9bn during the period. “Despite a tough festive trading period”, it reported a marginal decline in the operating margin, to 23.6% from 24% in the previous year.
Trading conditions were “turbulent”, with widespread attention on unsecured lending, a depreciating rand, economic growth forecast downgrades, and “a consumer that is very indebted”.
“There are more macro factors at play than there are internal factors,” Mr Murray said. “We are by and large happy with everything in terms of the way the group is running, and the results that we have produced.”
The group has 18 retail brands including @home, American Swiss, Foschini, Markham, Totalsports, Sportscene and Fashion Express.
Mr Murray said the group had produced its highest profit yet, as it did in the previous financial year. A final dividend of 270c per share was declared, translating to a full-year total of 506c, an increase of 11.2%.
The group traded from 1,875 stores across SA and 104 ones in the rest of Africa at year-end. It opened 146 new stores during the year.
Foschini intended to double the number of stores in the rest of Africa within the next three years. “We are looking at countries we are not in at the moment, like Ghana, Angola and Mozambique,” Mr Murray said.
During the year, the group’s cash sales grew faster than its credit sales and now account for 40% of total sales. The retail debtors book, which amounted to R5.2bn, increased 14% while the group’s active account base grew 6% to 2.6-million accounts.
The credit environment had become more difficult with an increase in consumer delinquencies, Mr Murray said. Net bad debt as a percentage of the closing debtors book advanced to 10.5% from 9.4%, moving from 10.3% at the half-year, although this remained within expectations.
Mr Murray said Foschini had produced “very solid” revenue growth in its clothing, homeware and furniture and cosmetics divisions. Turnover growth in the clothing division was 11.8%, while in both homeware and furniture it rose 18%.
The cosmetics division posted an 11.7% turnover increase.
“Where we took a bit of strain was on jewellery and cellphones — those are very discretionary items,” Mr Murray said.
Foschini said that in line with the group’s strategy of investing for long-term growth, more than 150 new stores would be opened in the year ahead. This would increase trading space about 6%.