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The Foschini Group (TFG) is an investment holding company operating in the retail and financial services segments within southern Africa. The Group trades primarily in South Africa with retail turnover emanating from Botswana, Swaziland and Namibia accounting for 3,8% of the Group turnover. Comprising 14 trading brands in over 1 700 stores, the Group brings a lifestyle range of brands that are prominent household fashion brands into the retail market.
Turnover: R 9.936bn Trading Profit: R 2.301bn Trading Margin: 23.16%
Stores: 1,727 Trading Space: 537,951m2
Listed: Yes EBITDA: R 2.584bn HEPS: 632.30 cents
Click the headings above to view an extended report for the past 5 years
The Foschini Group


The company, which commenced trading in 1924, has been listed on the JSE Limited since 1 January 1941 and is regarded as one of the foremost independent chain store groups in the country. It is listed on the main board in the Consumer Services – Retail sector.

External Financial Services “RCS Group”

- Transactional Finance, comprising RCS Cards and RCS Private Label Cards
- Fixed Term Finance, comprising RCS Personal Loans and RCS Home Loans

The external financial services division provides a range of broader financial services to customers of the Group and to customers of unrelated retailers.

Over 15 000 people are employed by the Group, with just over 10 000 of these in a permanent full-time capacity, and the rest as either permanent part-time, flexitime, contract or casual employees. 


TFG Apparel Supply Company manages the supply of locally made apparel and co-ordinates the merchandise sourcing, shipping and quality assurance activities. A further two trading divisions offer financial services. All the trading divisions are supported by numerous service divisions which provide centralised support services. 


The company’s success is strongly driven by its desire to provide the right merchandise to the respective target markets of all its trading divisions, and its skill in achieving this objective has resulted in a successful track record. TFG believes that teamwork coupled with professionalism in all aspects of retailing is and will continue to be the foundation for the future. 


In our last annual report , we indicated that our group was well positioned to maximise returns when the economy recovered. A more positive con sumer sentiment, the catalyst of which was the 2010 FIFA Wor ld Cup™, combined with the benefits of our major strategic initiatives, have resulted in improved con sumer spending within our group.

Group Overview
This improved consumer spending became evident from the beginning of this financial year and accelerated in the second half, with Christmas trading above expectation. Our group trades in the mass middle market space and our customers have benefited from the more positive consumer sentiment which has been driven by real wage increases, lower
inflation and lower interest rates. Against this background, the group has produced a favourable result for this year. After three very difficult years from 2008 to 2010, it is clear
that the cycle has now turned and that the current financial year is the start of the upturn. In line with our strategy of driving top-line growth, buying efficiencies achieved during the year as a result of our supply chain initiatives, and assisted by the strong Rand, were passed on to our customers. With reference to the retail liaison committee (RLC) and other statistics,
our group has gained market share in all of our product categories. A key element of our group strategy over the last number of years is the continuation of our supply chain initiatives in order, inter alia, to ensure that lead times in ordering, acquiring and distributing stock
are reduced to the minimum and to enable us to react faster to changing trends. This has already resulted in improved lead times and increased stock turns, ensuring our ability to be first to market with key products and ultimately ensuring a more consistent delivery of our merchandise promise to our customers. We have also advanced our initiatives aimed at better assessing and monitoring the social and environmental practices of our suppliers, as well as promoting product safety and integrity. Being a credit retailer, in order to maximise turnover from our credit book, we embarked on a customer relationship management (CRM)
strategy of actively pursuing new accounts and maximising low usage of available credit. Our
success with this during the year has been far better than expected with 590 000 new accounts being opened and our active accounts growing by 10,5%. Foschini stores (which represents 28,6% of our group’s retail turnover), is now beginning to see the success of its repositioning and turnaround strategy and grew its clothing turnover in the second half by 18,2%, which, with the additional benefits of the group supply chain and CRM initiatives, positions this brand well for future growth. Our financial services division (TFG Financial Services) performed well during the year with a profit increase of 32,9%. Bad debts have
remained on a downward trend with net bad debts as a percentage of the debtors’ book reducing further to 9,2% from 9,9% last year. Our RCS subsidiary which is an operationally independent consumer finance business, performed well during the year with net profit before tax increasing by 22,0% to R275,6 million. Whilst we have spoken in the past of reducing our shareholding in this subsidiary below the 50% mark, such that we are no longer required to consolidate its results, our current strategy is to achieve this by way of a separate listing of the subsidiary in the next few years. During the year the group spent R453,8 million on share buy-backs by the share trust in order to hedge future outstanding share options granted to staff. Financial Performance Whilst the group’s detailed financial performance for the year is described in the CFO’s report, I would like to draw attention to the
■ retail turnover up 15,5%, with growth in the second half of 18,1%;
■ EBITDA at R2,5 billion;
■ second half headline earnings per share growth of 24,8%;
■ full-year headline earnings per share up 21,3% to 632,3 cents per share;
■ final dividend up 24,7% to 212,0 cents per share;
■ total dividend of 350,0 cents per share;
■ good performance from our retail debtors’ book; and
■ RCS Group performed well, with profit growth of 22,0%.

Trading Performance
After an encouraging first half performance, all divisions continued to perform well in the
second half resulting in 15,5% turnover growth for the year as a whole. Whilst the first half
produced turnover growth of 12,5%, the second half gained increased momentum with turnover growth of 18,1%. Our clothing merchandise category had the biggest improvement in the second half with growth of 19,5%, up from 11,7% in the first half. Same store turnover growth for the second half was at 13,2% with full-year same store growth of 10,8%. Product inflation averaged approximately 1% for the year. Cash sales as a percentage of total sales increased to 38,5% from 37,4%. Our @home division opened a further six stores and is now
trading out of 83 stores, 13 of which are the larger @homelivingspace stores. Turnover grew by 15,5% to R679,0 million. The rate of new store openings has reduced, allowing for greater focus on merchandise efficiencies. Same store turnover increased by 8,3%. The Exact! division increased its store base by three stores during the year to 208 stores. The focus
on clothing price points has continued to be very successful since implementation. Clothing
turnover increased by 22,4%, with same store turnover growth of 20,2%. Cellphone turnover
increased by 24,5%. Total same store turnover increased by 20,4%. The Foschini division comprising Foschini, Donna-Claire, Fashion Express and Luella increased its store base by 30 stores to 484 stores during the year. Performance was substantially better in the second half of the year with growth of 17,7% compared to 7,2% in the first half. Clothing turnover grew
by 12,4% for the year with growth in the second half of 19,4%. Same store turnover growth for clothing was 7,6%, cosmetics 5,4% and cellphones 23,3%, whilst total same store turnover grew by 8,3%. The Jewellery division comprising American Swiss, Sterns and Matrix increased its store base during the year by 16 stores to 381 stores. Trading was satisfactory with jewellery merchandise turnover increasing by 10,8% and cellphone turnover increasing by 15,8%. Jewellery same store turnover increased by 6,7% with total same store turnover increasing by 8,0%. The Markham division increased its store base by 13 stores to 247
stores. After a good first half, trading improved in the second half with clothing turnover growth of 23,7% resulting in total clothing growth for the year of 18,8%. Cellphone turnover increased by 28,8%. Clothing same store turnover for the year grew by 15,5% with total same store turnover increasing by 16,9%. The Sports division, trading as Totalsports, Sportscene and Duesouth traded satisfactorily, assisted in the first half by the 2010 FIFA World Cup™, with turnover growth for the year of 16,9% and same store turnover growth of 9,9%. Its store base increased by 33 stores during the year to 324 stores. TFG Financial Services manages
the group’s in-store credit card programme as well as the group’s financial service products such as club and associated magazines and our insurance products. This division had an excellent year, increasing profit by 32,9%. The retail debtors’ book, which amounts to R3,8 billion, increased by 20,6% during the year reflecting the impact of good account growth,
increased credit sales and the increase in the number of 12-month accounts. The performance of our retail debtors’ book continues to improve with net bad debt as a percentage of closing debtors’ book improving to 9,2% from 9,9%.

The RCS Group is an operationally independent consumer finance business that provides a broad range of financial services under its own brand in South Africa, Namibia and Botswana. It is structured into two operating business units, namely Transactional Finance
and Fixed Term Finance. The Transactional Finance business comprises the RCS general purpose card and other private label card programmes, whilst the Fixed Term Finance business comprises RCS Personal loans. Despite interest margin compression
because of the interest-capping formula under the National Credit Act, the RCS Group performed well during the year with net profit before tax increasing by 22,0% to R275,6 million. Net bad debt improved significantly with a reduction of 34,4% compared to the previous year. Its debtors’ book of R2,9 billion increased by 10% during the year. Its domestic medium-term note (DMTN) programme launched in March 2010 has been successfully implemented with over R1 billion of funding being raised to date comprising a mixture of long- and short-term paper. It now has surplus funding in excess of R600 million which is available to support its future growth. Our group’s shareholding in this division is 55% with the balance held by The Standard Bank of South Africa Limited.

The continuing strategic focus across our divisions is to improve our customers’ experience
through constantly developing our merchandise offering to consistently meet our customers’
needs, and by targeted expansion and upgrading of our store base. The two major drivers of this are our supply chain initiatives and our CRM activities. As part of this process, we
recognise the need to ensure that our material sustainability issues are integrated as part of core business strategy. To this end, we have engaged external consultants to assist us in developing a sustainability strategy, which will guide a longer-term process of setting clear sustainability objectives and performance targets. Phase I of this process is well under way. A review of our material issues, and of the relationship between sustainable development and our core value drivers, is provided in our Strategic Agenda section. Our commitment to promoting sustainable development includes an ongoing focus on building and maintaining shareholder value, demonstrating concern for our employees and the communities in which we operate, promoting broad-based black economic empowerment and ensuring responsible environmental practices. Our group’s current strategic objectives which are detailed elsewhere in this report include:
1. Supply chain optimisation
2. CRM focus
3. Store optimisation
4. Foschini division
5. Expansion and new markets
6. World-class HR capability
7. Transformation
Strategies of the individual divisions are referred to in the divisional review section of this report.

All our divisions are in good shape and are well positioned to continue benefiting from our strategic initiatives and the improved economy. We expect the more positive consumer sentiment to continue into the next financial year. However, we are mindful of the current inflation rate environment, particularly in regard to expected inflation in food and fuel, both of
which impact our customers. With increased inflation, interest rate increases are inevitable.
Retail turnover for the first 11 weeks of the new financial year has been encouraging and above expectation. We are aware that we are now facing the 2010 FIFA World Cup™ inflated turnover figures in our base from last year, as well as being up against a far better second
half performance in the previous year. Nevertheless, at this early stage in the financial year we are confident that we can again deliver a favourable performance this year. In line with our strategy, we will continue to open new stores and we anticipate increasing trading space in the new year by approximately 6% with the addition of approximately 100 new stores.

After 17 years with our group Howard Godfrey, the retail director of our @home division and TFG Design Centre, will be retiring later this year. Howard has been a valuable member of our operating board, on which he has served since October 1999 and his contribution,
insight and humour will be missed. I would like to thank Howard for his immense input to our group and wish him well in his retirement. Thanks to our chairman, David Nurek, for his effective leadership and to all the members of the supervisory board for their wisdom,
guidance and direction. I’d also like to thank my colleagues on the operating board for their input and support during this past year. Thanks are extended to the group’s 15 600 staff members for their contribution to our performance and success. I extend my sincere
appreciation to each and every one of them. To our shareholders, I extend thanks for their support of the group. I trust that their loyalty will continue to be rewarded. Finally, I would like to express the group’s appreciation to our suppliers, advisers, corporate stakeholders and customers for their contributions to the group’s activities and its successes.

20 June 2011
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The 2011 financial year was a pleasing year for our group. Indications are that this is the start of a cyclical upturn which should be apparent amongst credit-based cyclical retailers. Our customers have benefited from an environment of lower inflation, extremely low interest rates and real wage increases.

The group’s headline earnings per share increased by 21,3%. More significantly, turnover improved in the second half of the year with turnover growth of 18,1% and an increase in
headline earnings per share of 24,8%. It is evident that this year our group has grown its market share in all product categories, driven largely by the strategies implemented by
management during the last few years.
All our divisions traded well and are in good shape. Our financial services business fared extremely well with its profit increasing by 32,9%. Furthermore, our 55% investment in the RCS Group, an operationally independent consumer finance business, also performed well with a growth in earnings of 22,0%.
Our group has a strong balance sheet which has allowed us to invest for future growth. During the year, over 100 new stores were opened and a substantial investment made in our
retail debtors’ book, both of which will stand the group in good stead in forthcoming years. Our strong ongoing cash flow has enabled the group to increase its final dividend by
24,7% resulting in the total dividend for the year increasing by 21,5%.

On the international front, the health of the global economy continues to improve with private demand taking over from the public sector as the key growth driver, notwithstanding that the downside risks have recently increased. The South African economic recovery from the 2008/9 recession remains on track with GDP growth of 2,8% in the 2010 calendar year, compared with a decline of 1,7% during 2009. The rate of growth gained some momentum throughout 2010. GDP growth is forecast at 3,7% for 2011 and 3,8% for 2012 with growth in consumer spending set for a marginal acceleration in 2012. Consumer inflation for the 2010
calendar year rose by 4,3%, down sharply from the 7,1% in 2009. Looking forward the impact of higher food and oil prices will filter into inflation which is forecast to average 5% for 2011, increasing to around 6% from the fourth quarter. The rising inflation risks are likely
to bring about an increase in interest rates with the Reserve Bank projected to start the rate
tightening cycle in September 2011. Provided the rate increases are moderate and slow, their impact on consumer spending will take a few years to become evident and should not materially impact our turnover in the short term. The recent robust performance of the South African Rand can be explained by foreign appetite for South African assets. Because GDP
growth in emerging countries is expected to outperform that of advanced economies for the next number of years, Rand strength may persist for some time, notwithstanding that volatility will remain high. On the downside, employment growth is likely to remain low but given the lag between employment growth and a recovery in GDP growth, employment should start
to recover in 2011 and 2012. Looking forward, the outlook for the South African economy is
one of continued recovery from the global recession. Household disposable income growth was 7% in 2010, an accelerating trend above the rate of inflation. Household debt remains high, but has eased. All of this indicates that our economy will continue to recover during the next few years which bodes well for our business.

An important governance development this year has been the expectation on companies
to produce an integrated report. We recognise that integrated reporting is not simply a question of including a sustainability section within our annual report. Instead, it is about demonstrating our understanding of how broader societal issues impact on our business, reflecting on how these issues have influenced the strategic decisions adopted by the board,
and highlighting our approach to managing our most material sustainability impacts. With this understanding in mind, in this integrated annual report we have sought to provide sufficient context to enable our stakeholders to understand the key social, economic and environmental issues that affect the group, and to appreciate the impact, both positive and negative, of our operations on the social, economic and environmental well-being of the community. As my opening remarks have shown, TFG’s activities are clearly impacted by broader economic trends such as GDP growth, inflation, interest rates and employment. While these trends are beyond our immediate control, they nevertheless have a bearing on the nature of our strategic response. In terms of those issues where we can have a material impact, we have provided a material account of our performance over the past year. We have integrated our review of our sustainability performance within each of the sections of the report. In addition to reflecting on our strategic approach to addressing sustainability issues and to managing our impacts, we have provided a high-level overview in this report of our corporate social investment activities.

Our transformation committee has the task of driving the group’s broad-based black economic empowerment (BBBEE) strategy into the future. Our various internal transformation sub-committees tackle, on a daily basis, the various issues underlying BBBEE in order to ensure that our group plays its rightful role in the advancement of historically disadvantaged communities. I am pleased to note that in the Financial Mail’s Top
Empowerment Companies Report of 2010, our group has once again fared well.

The directors consider responsible corporate governance to be integral to the success of the group, and our commitment to it is outlined in our Corporate Governance report, which
appears elsewhere in this report. Assessment starts at the top with a comprehensive annual
review of the performance of all board directors, as well as of the board itself and its various subcommittees. These sub-committees, which cover the fields of audit, remuneration, risk, nominations and transformation, maintain diligent oversight of all significant factors covered by each committee. The group has formulated and abides by a code of ethics which includes
a set of clear goals to achieve in its relationships with customers, suppliers, staff, the general public and the communities among which we operate. The increasingly complex field of compliance with the laws and regulations governing our businesses is another among the many issues on the governance agenda. Following the publication of the King III Code of Corporate Governance, having early adopted many aspects in the previous year,
the remaining aspects have now been addressed and our group is compliant with the King III Code. The new Companies Act introduced on 1 May 2011 significantly changes the landscape of company law in South Africa. Before being enacted it underwent a rigorous process of debate by stakeholders and industry players. Our group has looked in detail at
the new Act and, where necessary, changes have and will be made to ensure full compliance.

At our annual general meeting on 1 September 2010 the change of name of our group from Foschini Limited to The Foschini Group Limited (TFG) was approved. This change in name is significant for our group and is intended to convey to the market the fact that we currently have a significant portfolio of 14 retail brands. In addition we have a sizeable financial services business as well as having a controlling interest in the RCS Group. The name
change was accordingly intended to emphasise the more diverse and broadly-based nature of our business.

We are pleased to welcome Eddy Oblowitz as a non-executive director of our company from
1 October 2010. Eddy has also been appointed to our board audit committee, as well as our internal audit and risk committee and with his considerable experience we look forward to his future contribution.

With all our divisions in good shape, the challenges we face next year are the World Cup turnover figures in our base from last year, particularly in our sports division, as well as the stronger performance in the second half of the year under review. We are well positioned to benefit from the continued upturn in the economy and are confident of producing pleasing results in the year ahead.

On behalf of the board I wish to extend deep appreciation and thanks to:
■ all employees for their excellent performance during the year;
■ our customers for their continued loyal support;
■ our shareholders for their support and confidence in the future of the group;
■ our suppliers, advisers and business associates for their co-operation and contribution to
the growth of the business; and
■ my fellow directors for their insight, guidance and valuable input.

David Nurek
20 June 2011
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TFG operates through the following divisions:


- Foschini, branded as Foschini, donna-claire, Luella and fashionexpress
- Markham
- exact!
- The Sports division, branded as sportscene, Totalsports and DueSouth
- The Jewellery division, branded as American Swiss, Sterns and Matrix
- @home, branded as @home and @homelivingspace
- TFG Apparel Supply Company
- FG Financial Services

The retail divisions retail clothing, jewellery, accessories, cosmetics, sporting and outdoor apparel and equipment and homeware to the broad, middle income group throughout southern Africa, mainly as a credit retailer. The ratio of cash sales to total turnover approximates 36%.
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Our banners / stores



@home, the homeware store, offers fashionable merchandise covering the Eat, Sleep, Bath, Cook and Live categories for the discerning homeowner. @home has certain exclusive international brands that differentiate us in the marketplace, and there is co...


This format offers design-conscious consumers a comprehensive range of affordable contemporary furniture.
13 Stores


The American Swiss brand is positioned to appeal to the fashion forward and image-conscious
customer, and offers consumers in the growing middle market appropriate products and brands to express their status. The American Swiss brand is highly visib...
Clothing & Apparel
211 Stores
Donna Claire

Donna Claire

Donna Claire focuses on a niche market offering stylish fashion for larger sized women, retailing a range of exquisite size 16 - 28 fashion designed specifically for this market. This niche chain will grow to over 80 stores by 2009.
Clothing & Apparel
90 Stores


DueSouth is recognised as a key player in the outdoor lifestyle market. It caters for modern, hi-tech, outdoor enthusiasts who enjoy shopping in an environment which stocks a wide range of products that correspond to their lifestyle. The target marke...
Clothing & Apparel
31 Stores


Exact! represents accessible fashion for everybody and is positioned as the group's value chain, selling a compelling and exciting range, most of which is exclusive to Exact!
Clothing & Apparel
208 Stores
Fashion Express

Fashion Express

Fashion Express, created as an alternative strategy to revitalise ailing Foschini stores, has successfully established itself as a value fashion chain.
Clothing & Apparel
148 Stores


The Foschini brand is positioned as a destination of choice for women seeking fashionable, current apparel and footwear, offering good value in an environment that is modern and friendly. It is a ladieswear retail store offering contemporary clothing...
Clothing & Apparel
228 Stores


Luella offers a range of ladies footwear, handbags and accessories aimed at the upper income market.
Clothing & Apparel
18 Stores


Markham is the largest men's fashion retail chain in southern Africa, located in most major shopping centres and large towns. Customers are provided with up to date, internationally inspired menswear of good quality and value, suitable for all occasi...
Clothing & Apparel
247 Stores


Matrix, the sunglasses and cellphone stores, is aimed at a sophisticated, fashionable, brand-conscious customer. It has a strong lifestyle orientation providing branded accessories aimed at the generally younger market. Advertising, store design and ...
Clothing & Apparel
24 Stores


sportscene offers a blend of sport and fashion brands directed mainly at youthful and fashion-conscious customers in a unique retail environment. Initiatives are undertaken outside the stores to keep the chain in touch with its target market – cult...
Sports Equipment, Clothing & Apparel
124 Stores


The Sterns brand is positioned as a trusted jeweller offering stylish jewellery for special occasions, with an emphasis on emotional warmth and romance. The brand is in the process of evolving towards a more contemporary brand.
Clothing & Apparel
146 Stores


Totalsports is the premier sportswear destination in the country, retailing top-performance brands complemented by fashion product providing the everyday sportsperson and supporter a world-class product offering well suited to their sporting needs.
Clothing & Apparel
169 Stores

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