Global operations help The Foschini Group post revenue growth of 16.9%
Diversification and international expansion a success
THE FOSCHINI Group (TFG) reported yesterday a 16.9 percent growth in revenue to R11.42 billion for the six months to the end of September with international operations contributing 48 percent in earnings.
Revenue from TFG Africa grew by 9.5 percent during the period. TFG operates in 34 countries across the globe.
Chief executive Doug Murray attributed the results to diversification within the business and international expansion. “The whole diversification within the group gives us the edge because we sell jewellery, sport apparel, fashion clothing in very different segments of the market. We have a nice split between credit and cash, which is very good for the business,” he said.
Profit
The company said its headline earnings per share increased by 5.7 percent to 496.8 cents per share, up from 470.2c per share as compared with the previous reporting period.
Operating profit before once-off acquisition and finance costs was higher at R1.7bn (up from R1.6bn). Profit attributable to equity holders of the group jumped to R1 million as compared with R971.5m in 2015.
Murray said the group was not pleased about the affordability regulations introduced by the National Credit Regulator. “The consumers are expected to produce proof of address and bank statements before they can apply for credit.
“We have been responsible credit providers and this regulation is having a negative impact on our credit turnover. It doesn’t make any sense. It has cost R310m credit turnover in the six months,” Murray said.
He said this would continue to have a negative impact on credit turnover and that is why the group has made a submission to challenge the ruling.
The group opened 129 outlets during the period, 83 of which were in Africa and 46 internationally with 22 brands spanning a variety of age and income groups. More than 3 220 outlets stock clothing, jewellery, accessories, sporting apparel and equipment, home ware and cellular goods and services.
The company declared an interim cash dividend of 320c per share – 4.6 percent higher than it did during the corresponding period last year.
Net bad debt reduced by 4.2 percent compared to an increase of 4.4 percent in the previous period.
The retail debtors’ book of R6.7bn had no growth, compared to March 2016.
The group said as a capital optimisation programme, 33 group stores were closed during the period. The company opened stores in Kenya. It said it planned to open more than 100 new outlets in the second half of the year with at least 90 in Africa.
“Trading space in African operations increased by 5.3 percent during the period,” Murray added.
TFG shares dropped by 2.56 percent on the JSE yesterday to close at R130.