TFG continues to grow well and position for future
TFG - Nov 9th 2012, 10:01
Retail group TFG (The Foschini Group) has again produced solid results, increasing turnover by 12,6% to R6,1-billion off a strong comparative base and pushing up diluted headline earnings per share by 18,8% to 396,1 cents in the six months to end September 2012.
Its interim dividend has increased by 24,2% per share to 236,0 cents on the back of continued growth and a sustained strong financial position.
Doug Murray, CEO of TFG says retail turnover for the first five weeks of the second half has continued at similar levels to the first half and despite the challenging economic environment, the outlook remained good.
“We believe we can again deliver a satisfactory result for the full year albeit against a strong base and remembering that the second half is always heavily dependent on Christmas trading” he says.
The group, which is one of the largest credit retailers in the country, consists of women and men’s clothing chains, jewellery, sport, homeware and furniture retail divisions as well as financial services and apparel supply divisions.
Among these are Foschini division which comprises Foschini, Donna-Claire, Fashion Express and Luella, exact!, menswear retailers, Markham and Fabiani, Jewellery division which includes American Swiss and Sterns and sport retailers, Sportscene, Totalsports and Due South. It also owns @home and @homelivingspace and two financial services divisions, one which supplies credit to its group customers and the other, RCS in which TFG holds 55% with Standard Bank. RCS provides transactional finance, personal loans as well as private label cards to other retailers.
Mr Murray says that the strategic initiatives undertaken by the group over the last few years continue to positively impact the group’s performance. These include supply chain management, CRM (customer relationship management), opening of new stores and expansion into the rest of Africa.
TFG will increase its floor space in the current financial year by 7% by opening 172 new stores bringing the total number of stores to 2 022 stores.
The group currently trades out of 98 stores outside of SA, with 62 in Namibia, 16 in Botswana, 12 in Zambia, 2 in Lesotho, 4 in Swaziland and 2 in Nigeria. Over the next 2 years a further 56 stores are planned to be opened in the countries where TFG already operates as well as Mozambique and Ghana. TFG believes that expansion into the rest of Africa is a longer term growth strategy and by the 2015 financial year TFG will be trading out of in excess of 150 stores in Africa with expected turnover of more than R1 billion.
Murray says that all merchandise categories did well over the period and gained market share. The group’s operating margin increased to 23,1%, moving closer to TFG’s medium term target of 25%.
The homewares division had excellent performance increasing sales by 22.1% in a highly competitive sector.
Cash sales as a percentage of total sales increased to 39%.
TFG’s 55% owned consumer finance business RCS performed well during the period with net profit before tax increasing by 22,2% to R185,6 million.
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