Bash gives Foschini-owner online sales boost

The Foschini Group (TFG) recorded declines in sales in all of its segments, but its impressive online sales growth – particularly through eCommerce platform Bash – provided a silver lining for the retailer.

TFG – which owns brands like Foschini, American Swiss, Bash, Archive and Jet – released a trading update for the 21 weeks ended 24 August 2024. The company expects to report mixed results for this period.

Its gross margin increased by more than 100 basis points as gross margins improved across all territories. This is despite 3.5% lower sales recorded in the period.

In particular, TFG Africa’s gross margin increased by around 200 basis points against a decline in sales of 1.0%.

The company said this was mainly due to high clearance activity during the prior period and the late start to winter in South Africa.

The increased margin, despite the normalised sales activity, meant that TFG Africa achieved a record gross profit of R5.9 billion, up around 4% from the comparable period.

TFG explained that the segment’s decline in sales must be seen against the aggressive inventory clearance activity in the prior period resulting from inventory build-up caused by load-shedding in the beginning of the 2023 calendar year. 

“Sales growth compared to the opening 21-week period of the 2023 financial year, which removes the distorting impact of last year’s clearance activity, was 16.5%, i.e., an annualised average growth rate of 7.9%,” the company explained.

“With excess inventories cleared by September 2023, and with better trading into the second half of 2024, gross margins normalised during the current period by around 200 basis points, despite the difficult trading conditions experienced throughout the market with inflation and living costs continuing to put pressure on consumer demand in discretionary categories.” 

The retailer explained that while the late onset of winter in South Africa added pressure at the beginning of the current period, improved consumer sentiment provided some relief after the outcome of the South African elections earlier this year.

TFG also recorded strong growth in online sales, which grew by 7.8% and now contributes 10.8% to total sales.

This increase is largely attributable to growth of 42.7% in South Africa via TFG’s Bash platform.

The retailer added that cash sales now contribute 73.0% to total TFG Africa sales and 81.2% to total group sales.

TFG London’s gross margin increased by 150 basis points, despite a significant 12.4% decline in sales. The company attributed this to continuing headwinds from low consumer confidence, which impacted non-food retail, particularly in the premium categories where its brands operate.

In addition, the company said this segment was significantly impacted by inventory delays due to shipping disruptions in the Red Sea, high inflation and elevated interest rates.

The retailer said this segment’s focus has been on growing its direct-to-consumer channel and the protection of gross margin, which improved by around 150 basis points.

The 12.4% sales decline it recorded is mainly the result of weak concession partner performance, with total own-store sales declining by 5.7%.

Online sales contributed 41.7% to total sales, an increase of 160 basis points against the prior period.

TFG Australia’s sales suffered the same fate, as they declined by 3.9% due to macro conditions that continue to dampen consumer demand. However, the segment’s gross margin improved by around 50 basis points.

Despite this contraction in sales, TFG Australia’s management’s focus on inventory management ensured an improvement in gross margin.

Online sales increased 10.5% during the current period and now contribute 8.8% to total sales.

Sales growth, compared to the prior period, in each of TFG’s business segments was as follows:

Business segment	21 weeks ended 24 August 2024	Contribution to group sales
TFG Africa	-1.0%	69.9%
TFG Australia	-5.5%	17.2%
TFG London	-12.7%	12.9%
Group	-3.5%	100%