Wrap Text
THE FOSCHINI GROUP LIMITED
Reg. No.: 1937/009504/06
Share code: TFG - TFGP
ISIN: ZAE000148466 ' ZAE000148516
('TFG')
TRADING UPDATE FOR Q3 FY2021 AND THE NINE MONTHS TO 26
DECEMBER 2020
SALIENT FEATURES:
- TFG Africa Q3 FY2021 turnover growth of 14,7% (excluding
Jet flat on prior year);
- Cash turnover growth for TFG Africa of 36,5% for Q3
FY2021 and 8,5% for the nine months to 26 December 2020.
Cash turnover now contributes approximately 68,5% to
total TFG Africa turnover;
- Further approvals received for the acquisition of the
remainder of Jet's operations in Africa;
- Continued focus on cost containment;
- Gearing further reduced; and
- Group online turnover for the nine months to 26 December
2020 contributed 12,0% (comparable prior period: 8,1%) to
total Group turnover.
BACKGROUND
The devastating impacts of the COVID-19 pandemic continue to
be felt across the globe. Many countries, including our three
main territories, South Africa, the United Kingdom (UK) and
Australia, are experiencing second waves of the pandemic, with
governments in these countries being left with no alternative
but to impose further lockdown restrictions to protect its
citizens and curb the spread of the virus.
In South Africa, the country reverted to adjusted Level 3
restrictions from 29 December 2020. In the UK, following the
second national lockdown from 5 November to 2 December 2020, a
third national lockdown was announced on 4 January 2021. In
Australia, different states and territories have different
levels of restrictions based on the specific number of
positive cases in each region.
While the government-enforced lockdowns are required to
protect peoples' lives, they also impact the countries'
economies, increase unemployment, place further strain on
already impacted consumers and force store closures.
Despite the ongoing challenges described above, the Group
continued seeking growth opportunities, and acquired the Jet
business in South Africa, effective 25 September 2020 and the
Jet businesses in Botswana, the Kingdom of Eswatini, Lesotho
and Namibia at various effective dates in December 2020 and
January 2021. Consequently, the results below include Jet,
unless otherwise indicated.
TFG AFRICA UPDATE
TFG Africa's turnover grew by 14,7% during Q3 FY2021 compared
to the same period in the previous financial year. Excluding
the newly acquired Jet business, turnover for the quarter
declined by 0,7%*, a satisfactory performance in difficult
trading conditions and against a record high November Black
Friday and November month in the previous financial year. All
merchandise categories grew turnover compared to the same
quarter in the previous financial year, except for the most
discretionary categories, cosmetics and jewellery.
* Pro forma management account numbers used to calculate an
indicative turnover growth
TFG Africa's like-for-like turnover growth (which by
definition excludes Jet) has been particularly encouraging
with growth of 5,3% in October and 0,8% in December. November
turnover was against a record Black Friday (c.R515m) recorded
in the previous financial year (this financial year c.R341m),
which led to a like-for-like turnover decline in November of
10,2% being reported as we ensured compliance with several
COVID-19 requirements, including the restriction on the number
of customers in store and curtailed operational hours.
The growth / (decline) in TFG Africa's turnover compared to
the same period in the previous financial year in the
respective merchandise categories were as follow:
Total
turnove
Total Total r
turnove Total turnove Total (declin Contribu
r turnove r turnove e) / tion to
(declin r (declin r growth TFG
e) / (declin e) / (declin for the Africa
growth e) / growth e) / nine turnover
Merchan Q1 growth H1 growth months for the
dise April Q2 July April Q3 Oct April 9 months
categor to June to Sept to Sept to Dec to Dec April to
y 2020 2020 2020 2020 2020 Dec 2020
Clothin
g (41,4%) (9,5%) (25,7%) 16,0% (7,8%) 72,6%
Homewar
e (25,0%) 4,9% (10,0%) 16,3% 0,3% 7,5%
Cosmeti
cs (51,5%) (18,7%) (34,3%) (4,3%) (22,2%) 3,9%
Jewelle
ry (70,3%) (15,1%) (41,0%) (13,0%) (28,9%) 5,1%
Cellpho
nes 5,1% 29,6% 17,6% 39,0% 25,4% 10,9%
Total
TFG
Africa (38,4%) (5,8%) (22,1%) 14,7% (6,6%) 100,0%
Cash turnover for Q3 FY2021 grew by 36,5% compared to the same
period in the previous financial year and by 8,5% for the nine
months to 26 December 2020. Cash turnover contributed 68,5%
to total TFG Africa turnover for the nine months to 26
December 2020.
Credit turnover for Q3 FY2021, purposely restricted by
stringent and reduced acceptance criteria, declined by 18,9%
compared to the same period in the previous financial year and
by 28,3% for the nine months to 26 December 2020.
Online turnover, contributing 3,6% to total TFG Africa
turnover for the nine months to 26 December 2020, continues to
exceed expectation with growth of 114,1% for Q3 FY2021 and
133,7% for the period 1 May to 26 December 2020 (we were not
permitted to do online deliveries during the government-
enforced lockdown in April 2020).
TFG AUSTRALIA UPDATE
TFG Australia continued to experience government-enforced
lockdowns and restrictions throughout Q3 FY2021, in response
to area-specific COVID-19 outbreaks.
Despite the extensive lockdowns in the State of Victoria in
the month of October 2020, turnover growth for Q3 FY2021
exceeded management's expectation at 0,4% (AUD), with online
turnover growth of 48,2% (AUD) compared to the same quarter in
the previous financial year. For the nine months to 26
December 2020, online turnover contributed 9,9% to total TFG
Australia turnover.
Supporting the Q3 FY2021 turnover growth, was a period of
minimal disruption experienced in November and the start of
December, which contributed to an improvement in consumer
confidence and a strong sales trend into Christmas.
Although turnover declined 15,5% in October, due to extensive
lockdowns and the associated store closures in the State of
Victoria, it recovered strongly during November and December
with growth of 6,4% and 9,5%, respectively. The like-for-like
turnover growth showed a similar trend with a decline of 3,2%
in October, followed by excellent growth of 3,7% and 6,8%
during November and December.
The growth / (decline) in TFG Australia's turnover compared to
the same period in the previous financial year was as follow:
Nine
Q1 April Q2 July H1 April Q3 Oct months
to June to Sept to Sept to Dec April to
2020 2020 2020 2020 Dec 2020
Retail
turnover
movement (%) '
AUD
denominated (42,4%) (12,4%) (26,9%) 0,4% (16,2%)
TFG LONDON UPDATE
The performance of TFG London continues to be negatively
impacted by government-enforced national lockdowns with the
segment losing c.40% of its trading hours during the nine
months to December 2020 as a result of enforced store
closures. Furthermore, the strong consumer association of our
TFG London's brands with occasion and formal workwear has
resulted in reduced overall levels of consumer demand as
social mixing and in-office attendance continue to remain
largely prohibited. As a result, whilst traffic to TFG
London's online channels has held firm, and their operations
robust throughout, they have not been able to adequately
compensate for the lost sales from physical outlets.
With the announcement of the third national lockdown on the 4th
of January 2021, we do not expect to see a near term recovery
in occasion and formal workwear sales. This said, we have
seen no shift in consumer sentiment away from our underlying
brands, and with pent up demand for social gatherings,
insolvencies in our competitor set, and the cost reductions
achieved in store rentals and at head office, TFG London is
well positioned for recovery once the vaccine rollout is
further advanced.
The decline in TFG London's turnover compared to the same
period in the previous financial year was as follow:
Nine
Q1 April Q2 July H1 April Q3 Oct months
to June to Sept to Sept to Dec April to
2020 2020 2020 2020 Dec 2020
Retail
turnover
movement (%) '
GBP
denominated (68,5%) (41,9%) (56,2%) (41,4%) (50,8%)
Online turnover performance from TFG London's own sites
continue to outperform weaker department store channels with
growth of 11,6% (GBP) for Q3 FY2021 and growth of 5,0% (GBP)
for the nine months to 26 December 2020. The contribution of
online turnover to TFG London's total turnover for the nine-
month period was 57,6% (30,9% in the comparable period last
year).
GROUP PERFORMANCE UPDATE
Overall the Group delivered a solid performance during Q3
FY2021 with Group turnover growth of 5,5% compared to the same
period in the previous financial year (TFG Africa and TFG
Australia growing by 14,7% and 0,4% respectively as above).
Group cash turnover for Q3 FY2021 grew by 14,1% (TFG Africa:
36,5%), contributing 79,9% to total turnover for the three-
month period. Group credit turnover declined by 18,9% during
Q3 FY2021 when compared to the same quarter in the previous
financial year.
Online turnover for the Group continued to excel with growth
of 32,3% (TFG Africa: 114,1%) for Q3 FY2021 compared to the
same period in the previous financial year.
For the nine months to 26 December 2020, total Group turnover
declined by 13,3% compared to the same period in the previous
financial year (excluding Jet: -17,5%*) due to the impact of
lockdowns in April and May in all our countries of operation,
and subsequent periods of lockdowns in the UK and Australia as
previously reported. Group cash turnover declined by 7,9%
compared to the same period in the previous financial year,
contributing 78,2% (comparable prior period: 73,6%) to total
Group turnover for the nine months to 26 December 2021.
* Pro forma management account numbers used to calculate an
indicative turnover growth
Group online turnover grew by 28,2% (comparable prior period:
2,9%) for the nine-month period, contributing 12,0%
(comparable prior period: 8,1%) to total Group turnover.
Continued focus on cost control has ensured that trading
expenses for the nine months remain well below the comparable
prior period.
The Group's debt equity position continues to improve owing to
strong cash generation, working capital optimization,
deliberate paying down of debt and the successful rights offer
concluded in July 2020.
JET
As was announced on SENS on 25 September 2020 and 5 November
2020, the Group acquired certain commercially viable stores
and selected assets of Jet in South Africa, effective 25
September 2020. The integration of these 382 Jet stores in
South Africa has been progressing according to plan. The most
critical business integration areas including IT, Human
Resources and Finance are being monitored on a weekly basis
and are anticipated to be completed within the planned budgets
and timeframes.
Shareholders are hereby notified that since our interim
results announcement on 5 November 2020, we have also
successfully concluded the acquisition of Jet in Botswana (14
stores), the Kingdom of Eswatini (6 stores), Lesotho (8
stores) and Namibia (15 stores) following the fulfillment or
waiver, as the case may be, of all the conditions precedent in
respect of the transactions in the respective countries.
The acquisition of Jet resulted in the preservation of
employment for c.5 000 Jet staff. In these challenging times,
where every job is critical, the creation and preservation of
jobs continues to be a priority for us.
STRATEGIC UPDATE
Although the trading environment across all three our main
territories is expected to remain challenging, we are
confident that our strategic investments, both previous and
current, into digital transformation; e-commerce platforms;
vertical quick response local supply chain capacity; and
product, brand and category diversification, will continue to
benefit the Group into the future.
We will continue to adapt and strengthen our business through
continued prudent cost savings measures and the responsible
management of cash resources and liquidity in response to the
uncertain trading environment, whilst prioritising measures to
protect our employees, customers and other stakeholders.
PRO FORMA INFORMATION
Pro forma management account information for Jet was used in
this announcement for illustrative purposes only to provide an
indicative turnover growth for the Group and for TFG Africa
excluding the acquired Jet stores.
Jet turnover for the period 25 September to 26 December 2020
relating to the acquired Jet stores were removed as if the
acquisition did not take place.
This pro forma information, because of its nature, may not be
a fair reflection of the Group's results of operations,
financial position, changes in equity or cash flows. There are
no events subsequent to the reporting date which require
adjustment to the pro forma information.
The pro forma management account turnover numbers used were:
TFG Africa Q3 Oct to Dec Q3 Oct to Dec Growth
2020 2019
Rm Rm %
TFG Africa
turnover
including Jet 8 849,8 7 713,4 14,7%
Less: Jet
turnover# 1 193,1
TFG Africa
turnover
excluding Jet 7 656,7 7 713,4 (0,7%)
Group Q3 Oct to Dec Q3 Oct to Dec Growth
2020 2019
Rm Rm %
Group turnover
including Jet 12 246,2 11 610,9 5,5%
Less: Jet
turnover# 1 193,1
Group turnover
excluding Jet 11 053,1 11 610,9 (4,8%)
TFG Africa Nine months Nine months Growth
April to Dec April to Dec
2020 2019
Rm Rm %
TFG Africa
turnover
including Jet 17 121,0 18 333,0 (6,6%)
Less: Jet
turnover# 1 215,3
TFG Africa
turnover
excluding Jet 15 905,7 18 333,0 (13,2%)
Group Nine months Nine months Growth
April to Dec April to Dec
2020 2019
Rm Rm %
Group turnover
including Jet 24 776,2 28 566,0 (13,3%)
Less: Jet
turnover# 1 215,3
Group turnover 23 560,9 28 566,0 (17,5%)
excluding Jet
#
The adjustment is based on management accounts. The Group is
satisfied with the quality of these management accounts which
are unaudited.
The directors are responsible for compiling the pro forma
financial information in accordance with the JSE Limited
Listings Requirements and in compliance with the SAICA Guide
on Pro Forma Financial Information. The underlying information
used in the preparation of the pro forma financial information
has been prepared applying the accounting policies in place
for the year ending 31 March 2021.
Shareholders are advised that this trading update has not been
reviewed or reported on by the Company's external auditors.
Cape Town
19 January 2021
Sponsor:
UBS South Africa Proprietary Limited
Date: 19-01-2021 01:30:00
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