The Foschini Group Limited (TFG) delivered a strong performance for the year ended 31 March 2012, increasing its sales by 17% to R11.6-billion, outperforming the rest of the industry and gaining significant market share over its retail competitors.
TFG increased headline earnings per share by 22,1% to 772,0c a share and diluted headline earnings per share by 23,6% to 766,1 cents. When comparing the annual moving average clothing turnover growths as reflected by the RLC (Retail Liason Committee), TFG’s clothing (excluding sportswear) for the last 2 years has significantly outperformed the RLC average, reflecting large market share gains.
A final dividend of 265,0 cents per share has been declared – an increase of 25,0% compared to the final dividend last year – resulting in a total dividend for the year of 455,0 cents per share, an increase of 30% for the year.
Doug Murray, CEO of TFG says the strategic initiatives undertaken by the group have assisted TFG in achieving these good results. The strategic initiatives include:
supply chain initiatives which have improved the group’s competitive advantage by enabling TFG to meet the demand for seasonal fast-fashion merchandise; and
· CRM (customer relationship management) endeavours, enabling the opening of new accounts and encouraging existing customers to upspend through our newly launched rewards programme
Murray says while the bulk of TFG turnover is generated from trading out of 1 857 stores across SA, it already has 87 stores in the rest of Africa and plans to expand that significantly to around 143 by 2015.
“We now have 58 stores in Namibia, 11 in Botswana, 12 in Zambia, 2 in Lesotho and 4 in Swaziland, which accounted in the past year for a combined turnover of around R500-million. We plan to expand this and the group forecast for 2015 is that R900-million in sales will be generated in other Africa markets.
“Whilst we have recently opened 12 stores in Zambia, over the next 2 years we will be expanding into Nigeria and Mozambique, as well as further expansion in territories where we already operate.”
The group’s RCS subsidiary performed well during the year with net profit before tax increasing by 25,3% to R345,2million. It remains TFG’s intention to separately list RCS at some point in the future.
Other exciting moves by the group in the past year include acquisitions such as luxury menswear brand Fabiani and G-Star’s two franchise stores in SA, as well as a franchise agreement with international ladies footwear and accessories brand, Charles and Keith. It also purchased its long standing clothing manufacturing supplier Prestige Clothing, the effect of which will be an increased competitive edge and faster access and turnaround times for seasonal fashion merchandise across the group.
Commenting on the prospects for the current trading period, Murray said although there had been a softening in trading since January this year, retail turnover across all divisions was satisfactory for the first 8 weeks of the new financial year. However some caution was warranted given the impact of the higher fuel and utility costs on its customers as well as the fact that the comparative base remains very high.
“We remain cautiously optimistic about the year ahead and continue to invest for long term growth. In the new year we will open more than 140 stores in certain of the formats which are currently under-represented which will increase trading space in excess of 6%.”
In line with our strategy of driving top line growth, buying efficiencies achieved during the year were passed on to our customers with good results. The group’s operating margin for the year increased to 24,0% from 23,2% edging closer to its medium term target of 25%.
Commenting on the various operating divisions, Murray said overall sales increased by 17% over the past year with clothing sales alone up 18,3%.
“@home, which trades out of 88 stores including 14 large format @homelinvingspace stores, increased its turnover by 18% which is excellent given the general economy.
“Exact, through its 215 stores, increased clothing turnover by 21,8% with total sales up 19,9% to R1,12-billion while the Foschini division comprising Foschini, Donna-Claire, Fashion Express and shoe specialist Luella increased its base to 516 stores and sales to R4,2-billion. Clothing turnover grew by 15,6%.”
Despite the global recession, higher gold price and the fact that jewellery is considered a luxury product, TFG’s Jewellery division, which comprises the 2 biggest jewellery brands in the country, namely American Swiss and Sterns, continued to do well. Through its trading base of 395 stores, it increased total sales by 9,2%.
Even though the Sports division trading as Totalsports, Sportscene and Duesouth is trading off a very high base in the wake of good sales generated by sport enthusiasts around the soccer world cup, it increased its turnover by 21,8% to R2,1-billion in the past year. Its store base grew by 53 stores to 377 stores countrywide.
The group’s R4,6 billion retail book increased by 19,5% during the year, reflecting the impact of good account growth, increased credit sales and the increase in the number of 12-month accounts.