Foschini-owner betting on economic turnaround after sales slowdown

The Foschini Group (TFG) posted record gross profits in the first half of its 2025 financial year despite sales growth remaining flat in TFG Africa and declining in TFG London and TFG Australia.

Net profit, however, declined by 4.34% year over year to R1.12 billion due to increased insurance costs and trading expenses. 

Foschini also came under pressure from sales growth being flat in Africa and declining in the UK and Australia. 

Foschini said the overall sales decline of 2% compared to the first half of the 2024 financial year is due to difficult trading conditions in all territories and high-clearance-driven sales in TFG Africa in the comparative period. 

However, the improvement from the 3.5% decline reported in our 21-week guidance in September indicates a noticeable improvement in trading activity since then, it said. 

Revenue was up 0.6% in its Africa division but 8.2% lower in TFG London and 2.4% lower in TFG Australia. Overall revenue declined by 1.3% year-on-year. 

Headline earnings per share was 5.6% lower at 371.6 cents. Despite this, the company raised its interim dividend by 6.7% to 160 cents per share. 

TFG’s eCommerce offering, Bash, continued its very strong growth, increasing online sales in TFG Africa by 47.9%, and it now contributes 5.6% of all retail sales. 

“All three territories have faced extended periods of macro-economic headwinds coupled with a high clearance-driven sales base in TFG Africa last year,” TFG CEO Anthony Thunström said. 

“However, our focus on retail fundamentals and our strategic investments have contributed to a record gross profit performance and stronger margins in all of our businesses”.

Thunström pointed to recent post-request trade as evidence that some positive economic signs may relieve consumers and boost demand. 

In the five weeks since the reporting period ended, TFG Africa sales growth was up 8.3% compared to -0.1% for the interim period, while both London and Australia businesses posted stronger growth.

TFG Africa’s sales growth has been largely driven by cosmetics and homeware, with continued growth in its credit offering helping to support revenue.

Leveraging Tapestry’s vertically integrated furniture manufacturing, TFG is now selling more than 50,000 sofas per annum at improved margins, as more than 80% can be locally manufactured. 

The South African business has also extended its beauty offering, which was previously concentrated in its Foschini business, across more of its 26 brands in South Africa. 

TFG’s London business was significantly impacted by inventory delays due to Red Sea disruptions, high inflation and elevated interest rates. 

TFG London’s management has focused on growing the direct-to-consumer channel and protecting the gross margin, which improved by 360 basis points compared to the prior period. 

However, this was insufficient to offset the lower sales activity, with gross profit 3,1% lower.

TFG Australia also suffered from persistently high inflation and elevated interest rates, with consumers continuing to remain under pressure, which impacted demand. 

As part of the results presentation, Thunström elaborated on the acquisition through its UK subsidiary of British fashion and lifestyle retailer White Stuff for £51.7 million (R1.16 billion).  

White Stuff has 113 stores and 46 concessions in the UK. The business also operates six stores and 25 concessions across Europe. 

The brand sells internationally via its website and has 606 wholesale stockists. White Stuff has a solid track record of financial performance, and in the financial year to 30 April 2024, the business achieved revenue of £154,8 million and EBITDA of £8,6 million.

“We will continue to focus on margin improvement, inventory management, and cost control and ensure ongoing realisation benefits from key strategic projects,” Thunström said. 

“The group is very well positioned and prepared for what is hopefully a more positive business cycle, and our strategic investments have positioned us favourably to benefit from any uptick in the economic conditions.”