Strong cash sales and accelerated Africa expansion for TFG
The Foschini Group - Nov 8th, 14:03
Retail group TFG (The Foschini Group) has increased total retail sales by 9% to R6.7-billion with sales in the rest of Africa growing 25% in the six months to the end of September 2013. Cash sales in this period grew by 12.7%.
Its diluted headline earnings per share rose by 3,8% to 411.2 cents on a strong, sustained operating margin of 22.5%. An interim dividend of 243,0 c a share has been declared.
The group currently trades out of over 2000 stores, 116 of them located outside of South Africa. Its accelerated planned expansion into the rest of Africa aims to more than double its footprint outside of SA to 300 stores by 2018.
Doug Murray, CEO of TFG says “a feature of the past six months, which was marked by the difficult consumer credit cycle, was the growth of the group’s cash sales which were up by 12.7% for the period. Cash sales account for about 40% of our total sales and we are very pleased to see cash customers continue to favour our stores.”
“The difficult credit environment is unlikely to improve in the second half of the year due to the high level of consumer indebtedness and consequently enhanced credit risk management practices will continue to be implemented.”
He said measures include scorecards being updated, late stage collections being in-sourced, increased focus on early stage collections and more frequent utilisation of external bureau information.
Mr Murray said group sales for the first five weeks of the second half of the year had continued at similar levels to the first half. Given the weaker festive season performance last year, he expects a better second half performance which as always is heavily dependent on forthcoming Christmas trading” he said.
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.
Among these are the Foschini division which comprises Foschini and Donna-Claire; exact!; Fashion Express; Markham; Fabiani; G-Star; the 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 an operationally independent consumer finance subsidiary in which TFG holds 55%.
Mr Murray says that the group’s strategic initiatives, supply chain, CRM (customer relationship management), Africa expansion and omni-channel will continue.
The group currently trades out of 116 stores outside of South Africa, which traded well, increasing turnover by 25%. Same store sales increased by 15.2%.
The group currently has stores in Namibia, Botswana, Zambia, Lesotho, Swaziland and Nigeria and stores are planned to be opened in Ghana, Angola and Mozambique. Mr Murray says that home wares and furniture performed exceptionally well increasing turnover by 14,1%.
TFG Financial Services’ R5.5-billion retail debtors book increased by 5.7% since year end. Bad debt as a percentage of closing debtors book increased to 11.4% from 10,5% at year-end, within management expectations.
RCS performed well during the period with net profit before tax increasing by 11.6%. Net bad debt as a percentage of debtors book increased to 7% from 6.6% at the year end, showing its prudent approach to debtors’ management appropriate for the tough credit environment.
Non-performing loans’ impairment cover was at a healthy level of 110.8%. The debtors book of R4.5-billion increased by 6.1% largely due to its credit card receivables which grew by 10.2% to R3.4-billion while unsecured loans receivables reduced by 5.5% to R1,1-billion, representing a conservative 23% of the total receivables business.
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