Wrap Text
THE FOSCHINI GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1937/009504/06)
Ordinary share code: TFG
ISIN: ZAE000148466
Preference share code: TFGP
ISIN: ZAE000148516
("TFG" or "the Company" and together with its affiliates "the Group")
TRADING UPDATE FOR Q3 FY2024 AND THE NINE MONTHS ENDED 30 DECEMBER 2023
This trading update relates to the nine-month year-to-date period from 1 April
2023 to 30 December 2023 and the 13-week period from 1 October 2023 to 30
December 2023 ("Q3 FY2024") against the comparative nine-month year-to-date
period from 1 April 2022 to 31 December 2022 and the 13-week period from 2
October 2022 to 31 December 2022 ("Q3 FY2023").
SALIENT FEATURES
- Group turnover for Q3 FY2024 grew 4,5% on Q3 FY2023, and 9,0% for the nine
months ended 30 December 2023;
- TFG Africa turnover grew 5,1% in Q3 FY2024, with like-for-like turnover
growth of 0,7%; Turnover for the month of December grew 11,8% (like-for-
like 6,1%), with the highest full-price contribution for the year to date;
- TFG Africa's cash turnover grew 6,6% in Q3 FY2024. Cash turnover for the
quarter now comprises 75,8% of TFG Africa turnover and 82,4% of Group
turnover;
- TFG London turnover declined 3,0% (GBP) in Q3 FY2024 off a strong post-
COVID-19 recovery base in Q3 FY2023;
- TFG Australia turnover declined 7,3% (AUD) in Q3 FY2024, also off a strong
post-COVID-19 recovery base; and
- Group online turnover grew 29,2% in Q3 FY2024, contributing 9,1% (Q3 FY2023:
7,4%) to total Group turnover for the quarter. TFG Africa online turnover
grew 44,8% in Q3 FY2024, contributing 4,2% of total TFG Africa turnover
(Q3 FY2023: 3,0%)
OPERATING CONTEXT
Economic conditions in all operating territories remain challenging.
In South Africa, this was exacerbated by continued load shedding and delays
experienced at ports, which impeded the planned flow of inventory. The impact of
these import delays was offset to an extent by the ability to increase volumes
from TFG's local manufacturing capacity.
As previously communicated, TFG London and TFG Australia's performances are set
against last year's exceptionally strong post COVID-19 recovery. Consumers
remain under pressure, with higher inflation and interest rates adversely
impacting sales.
Turnover growth in each business segment was as follows:
Q3 FY2024 Nine months
contribution Nine months FY2024
to Group FY2024 vs. contribution
Q3 FY2024 turnover Nine to Group
vs. months turnover
Business segment Q3 FY2023 FY2023
TFG Africa (ZAR) 5,1% 72,6% 11,7% 70,2%
TFG London (ZAR) 9,0% 11,4% 7,4% 13,0%
TFG Australia (ZAR) (0,8%) 16,0% 0,1% 16,8%
Group (ZAR) 4,5% 100,0% 9,0% 100,0%
TFG AFRICA PERFORMANCE UPDATE
Turnover in Q3 FY2024 grew 5,1% on Q3 FY2023 (including Clothing turnover growth
of 6,4%), with like-for-like turnover growth of 0,7%. Turnover for the month of
December grew 11,8% (like-for-like 6,1%), with the highest full-price contribution
for the year to date.
Turnover was impacted by a generally softer Black Friday period in South Africa,
with Stage 6 load shedding implemented over that weekend. Despite the challenging
macro context, festive season trade delivered pleasing results, with core
merchandise categories achieving strong growth for the month of December 2023.
Category turnover growth for TFG Africa was as follows:
Q3 FY2024 vs. Q3 FY2024 contribution to
Merchandise category Q3 FY2023 TFG Africa
Clothing 6,4% 75,4%
Homeware 0,9% 12,1%
Cosmetics 3,4% 2,5%
Jewellery (2,6%) 3,7%
Cellphones 3,4% 6,3%
Total TFG Africa 5,1% 100,0%
Nine months FY2024
Nine months FY2024 vs. contribution to TFG
Merchandise category Nine months FY2023 Africa
Clothing 10,6% 73,7%
Homeware* 30,8% 13,0%
Cosmetics 4,0% 2,5%
Jewellery (0,2%) 3,6%
Cellphones 4,5% 7,2%
Total TFG Africa 11,7% 100,0%
*Non comparable growth resulting from the acquisition of Tapestry Home Brands in
the prior year.
Cash turnover grew by 6,6% in Q3 FY2024 vs. Q3 FY2023, contributing 75,8% to total
TFG Africa turnover. For the nine months ended 30 December 2023, cash turnover
grew 15,3% compared to the same period in FY2023 (74,6% of total TFG Africa sales).
Credit turnover grew 0,7% in Q3 FY2024, when compared to Q3 FY2023, and by 2,3%
for the nine months ended 30 December 2023. Average acceptance rates for new
accounts remained conservative at 17,8% for the nine months ended 30 December 2023
(FY2023: 20,4%), which is appropriate in the context of the constrained economic
environment.
Online turnover grew 44,8% in Q3 FY2024, now contributing 4,2% of total TFG Africa
turnover (Q3 FY2023: 3,0%) and 40,2% (contributing 3,8%) in the nine months ended
30 December 2023, when compared to the nine-month period last year. Turnover
growth has been driven by the consolidation of our TFG Africa retail brands on
the Bash platform which was ranked as the number one South African fashion shopping
app.
TFG Africa opened 42 new stores during Q3 FY2024 (210 during the nine months ended
30 December 2023), bringing the total number of stores to 3,663 stores as at 30
December 2023.
TFG Africa's gross margin continues to recover from the impact of promotional
activity in the first half of FY2024 required to clear excess inventory due to
the impact of load shedding. Inventory levels decreased 11,6% compared to December
2022 and 13,7% compared to the FY2023 year end.
TFG LONDON PERFORMANCE UPDATE
TFG London's performance for Q3 FY2024 showed some improvement in a tough consumer
market and against a high base, with turnover declining 3,0% (GBP) for the Q3
FY2024 quarter, and 7,9% for the nine months ended 30 December 2023.
Online turnover grew 8,4% in Q3 FY2024 and its contribution improved to 44,5% (Q3
FY2023: 39,9%).
TFG AUSTRALIA PERFORMANCE UPDATE
TFG Australia's turnover declined 7,3% (AUD) for the Q3 FY2024 quarter against
the post COVID-19 recovery base, and with consumer confidence remaining low. For
the nine months ended 30 December 2023, turnover declined 7,2%.
Online turnover declined 1,4% for the Q3 FY2024 quarter, contributing 6,2% to
total TFG Australia turnover (Q3 FY2022: 5,8%).
OUTLOOK
Trading conditions and consumer confidence are likely to remain under pressure,
exacerbated by higher interest rates and inflation, as well as continued load
shedding and port delays in South Africa.
Turnover in Q4 FY2024 is expected to grow ahead of Q4 FY2023 given the impact of
the significant load shedding experienced in this period last year.
TFG continues to demonstrate operational and financial resilience from a
diversified platform of market leading consumer brands and is well positioned to
navigate the ongoing challenging economic conditions in all territories.
Shareholders are advised that the financial information on which this trading
update is based, including any forecast or estimate financial information
contained herein, has not been audited, reviewed or reported on by the Group's
external auditors.
Cape Town
24 January 2024
Sponsor:
Rand Merchant Bank (A division of FirstRand Bank Limited)
Date: 24-01-2024 08:45:00
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