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The Foschini Group shines bright in retail sector with stellar performance and social investment

The Foschini Group shines bright in retail sector with stellar performance and social investment
Foschini on June 19, 2020 in Springs, South Africa. It is reported that South African retailer TFG ( The Foschini Group) plans to raise R3.95 billion ($229.66 million) through a rights offer to lower debt and protect its balance sheet, as profits fell by 1.1% in the year to March 31. (Photo by Gallo Images/OJ Koloti)
Neesa Moodley
By Neesa Moodley
14 Nov 2022
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Different business sectors each have their own stars and, in recent years, The Foschini Group has proved to be one such in the retail sector.

The company - which houses brands including Foschini, Coricraft, American Swiss, G-Star Raw, @home and Totalsports - grew retail turnover 23.5% to R23.5-billion for the six months to the end of September this year, largely off the back of continued market share gains and outstanding performance in its UK and Australia businesses.

Chief executive Anthony Thunström noted that the strong performance of The Foschini Group (TFG) was achieved despite headwinds including increased levels of load shedding in South Africa, where close to half a billion rands of turnover was lost, severe flooding in Australia and double-digit inflation in the UK.

Cash retail turnover grew 25.5%, significantly ahead of credit sales growth, and now contributes 80.4% to the group total. However, in an environment of rising interest rates and increasing inflation, TFG has chosen to move towards more stringent acceptance criteria at 21%, down from 25% during the same period last year.

In line with pleasing revenue growth and the continued focus on costs, some debt was used to fund further profitable acquisitions and organic growth.

Rob Lewenson, head of responsible investment at Old Mutual Investment Group, says from a social impact point of view, TFG has taken a deep view on the empowerment scorecard to look at how it can empower local businesses, local manufacturers and local suppliers. 

“That’s true transformation and true impact,” he says. 

Foschini store on 19 June 2020 in Springs, South Africa. (Photo: Gallo Images / OJ Koloti)





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Since acquiring Cotton Traders, the manufacturing arm of the Granny Goose business, in September last year, TFG has boosted employment by 20%. 

TFG’s group director for the homeware division, Shani Naidoo, has gone on record saying that a R20-million factory expansion is in the pipeline.

The TFG factories in Maitland, Cape Town and Caledon initially started with just 16 employees and are on track to grow to 5,000 employees by 2026. 

For the period under review, TFG spent a total of R4.2-billion or 17.7% of turnover on employment. Within the Tapestry arm, the group is trialling the local manufacture of @home sofas and realising cost efficiencies of 20% to 25%.

Thunström says the use of localised, own manufacturing rather than outside suppliers has resulted in a R220-million increase in margins.

This output was achieved in one of the tougher economic periods to date, with TFG reporting 132,000 trading hours lost during the first half of the year, due to rolling blackouts. 

However, management is dealing with this by investing in backup power solutions installed across 57% of stores throughout the country and covering about 68% of turnover by year-end. 

TFG has also deployed mobile point-of-sale devices across key stores to enable trade during rolling blackouts, and is actively engaging with landlords to discuss alternative and emergency power options.

Earlier this year in June, TFG launched a leading new fashion and lifestyle shopping platform, Bash, in beta. At full launch, the platform will offer more than 100,000 SKUs, eclipsing local competitors. 

TFG also continued to grow its Rewards customer base, adding about a million new members in the year to date and bringing the total to almost 30 million.

“One out of every two South Africans is now a TFG Rewards member,” says Thunström. 

“Rewards customers are proven to represent significantly higher value, are higher-frequency shoppers with TFG and have a higher uptake of value-added services.”

And the company’s success is not limited to local shores. 

Unlike several other South African companies that have tried to make a go of things in Australia (Woolworths, with its investment in David Jones), TFG Australia grew turnover by a whopping 48.7%, beating the odds despite global supply chain issues, a tight domestic labour market and above-average inflation. BM/DM

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