TFG lost R1 billion in sales due to load-shedding
The Foschini Group (TFG) reported a loss of more than 100,000 trading hours over January and February due to load-shedding, contributing to an estimated R1 billion in lost sales over the last year.
This most recent loss in trading hours brings the company’s total loss for the 11 months ended 28 February 2023 to 345,000 trading hours.
However, the company estimates the true impact far higher – close to double the figure – as load-shedding has dampened customer demand due to the associated disruption and inconvenience.
The company reports reduced footfall before, during, and immediately after load-shedding.
“The resultant higher levels of inventory have also necessitated increased levels of stock provisioning which will contribute to the deterioration of gross margin in TFG Africa compared to the previous financial year,” TFG said.
This is not the only impact of load-shedding on TFG, as it also incurred unbudgeted costs of around R65 million for diesel, security, and maintenance.
The company has spent R220 million in capital expenditure to date on backup power solutions.
Prospects in 2023 do not offer much relief, as the company estimates that an additional R30 million will have to be spent to ensure that 80% of TFG’s stores have backup power over the next few months.
Other consequences of load-shedding have included disruptions to operations.
However, at this stage, TFG reports that load-shedding has had a minimal impact on the company’s supply chain.
“We continue to monitor the impact carefully, but, given this prevailing uncertainty, it is difficult to predict the extent of these impacts accurately.”
The company did see retail turnover growth of 15.9% in the first two weeks of March 2023 due to lower levels of load shedding relative to January and February.