TFG strong despite power cuts, but a lot riding on Black Friday
FASHION retailer The Foschini Group (TFG) said, despite load shedding in South Africa, which led to a R400 million loss in turnover, it delivered solid interim results.
Its shares shed 7.07% to close at R109.62 on the JSE on Friday.
In its results for the half-year ended September 30, 2022, released on Friday, TFG chief executive Anthony Thunstrom said: “This in our world translates to approximately R200m in terms of lost profits. Now we’ve dealt with load shedding for some time in South Africa, and our customers have largely adapted to the inconvenience that this causes.
“Over the last few weeks of September saw load shedding escalate to levels four, five, and six, which has a far greater impact than load shedding of lower levels. For many of our stores, this meant that they were closed for at least six hours a day. Now it’s clearly not easy to trade under these circumstances,” he said.
Thunstrom said to put this into perspective, TFG was growing and in strong double digits for the first half of September, and then went into negative growth for the second half of the month.
“The only time that we’ve been in negative territory since the first few months of Covid. And then we bounce straight back to double-digit growth for October when we have lower levels of load shedding,” he said.
Thunstrom said in its UK business, soaring energy prices and food prices had driven inflation to their highest levels in more than 40 years and had created a very real cost of living crisis.
“In terms of our key geographies, only Australia has been relatively unaffected by these sorts of factors and their economy and their consumers continue to surprise on the upside.
“While no country is immune from the factors impacting the global economy, Australia emerged from Covid largely unscathed with record low unemployment, and something like A$160 billion (R1.8 trillion) and excess savings, which are now being spent and most of it domestically.
“By comparison, the South African equivalent to the excess savings over the same Covid period was around $5bn (R86bn),” he said.
Thunstrom said the group made provisions for power backup as he believed load shedding would not end soon.
“We plan to have close to 70% of our South African stores’ turnover protected before Christmas. This is going to cost in the region of R200m in additional capex, some of which we will fund from other budgeted capex projects.
“But really, not taking these measures isn’t an option at the moment. We are also actively engaging landlords to encourage them to equip their centres and buildings with solar power and backup.”
For the results period, TFG – the owner of Foschini, @Home, Markham, TotalSports, Sterns, and American Swiss – posted headline earnings per share that increased by 18.1% to 464.6 cents per share.
Group revenue rose by 23% to R25.1bn. Group retail turnover was the largest contributor to revenue, up 23.5% to R23.3bn.
The group declared an interim dividend of 170c per share.
Looking ahead, the group said it expected the trading environment and consumer confidence to remain under pressure, worsened by lost footfall due to load shedding in South Africa. Despite this, it anticipates sales growth heading into the end of the year.