TFG sees retail turnover growth of 16.9 percent in H1

Phase Eight and Whistles owner, The Foschini Group (TFG) said that it produced a satisfactory result for the period with retail turnover growth of 16.9 percent for the half year ended September 30, 2016. The company said this growth was achieved despite the backdrop of a difficult trading environment, particularly in South Africa. Turnover from TFG Africa grew by 9.5 percent with comparable sales growth of 2.1 percent.

Financial highlights of H1

Gross margin for the period remained broadly consistent in all merchandise categories. The Group achieved a gross margin of 49.6 percent for the period while a margin of 45.5 percent was achieved in TFG Africa. TFG said, Africa margin was impacted by The FIX which had a lower gross margin for clothing due to the impact of its transition from Fashion Express and strong cellular sales of 20.3 percent which historically trades at a lower margin.

Earnings per share increased by 5.7 percent to 496.8 cents per share for the period, up from 470.2 cents per share in the previous period. The company has announced an interim cash dividend of 320 cents per share, an increase of 4.6 percent.

Undertakes store rationalisation to boost growth

The Group opened 129 outlets during the period, 83 of which were in Africa and 46 internationally. As part of its capital optimization project, specific focus was placed on loss making outlets which resulted in 33 closures during the period. This brings the total number of outlets at end September to 3,221 in 34 countries. Trading space in the African operations increased by 5.3 percent since September 2015.

During the period, nine outlets were opened in African countries other than South Africa which includes debut TFG store, Sterns, in Kenya opened in September. This brings the total number of outlets to 185 across seven countries in the rest of Africa. These outlets traded well with turnover growth of 17.7 percent during the period and 6 percent comparable store turnover growth. All the African countries achieved positive comparable store turnover growth for the period. The Group opened 74 outlets in South Africa during the period.

The company said that its international division performed to expectation for the period. Phase Eight traded well with turnover growth of 11.6 percent in GBP and Whistles generated a positive EBITDA profit due to the strategies that have been implemented since acquisition. Earnings growth of 48 percent in GBP was achieved for the international division for the period.

Foresees negative impact of uncertain economic climate

TFG said, uncertainty continues to cloud the outlook for both the domestic as well as the global economy and continuing uncertainty regarding the potential impact of Brexit on both the UK and European economies remains.

Despite the economic outlook, it plans to open over 100 new outlets in the second half of the year, 90 of which will be in Africa with the balance being international. Further strategic initiatives planned for the second half of the year include working capital management and capital optimisation projects. Total retail turnover growth for the first five weeks of the second half is 13.3 percent with turnover growth of 12.2 percent in Africa.

Picture:Phase Eight