JOHANNESBURG – Fashion retailer TFG has delivered strong interim results for Africa, the UK and Australia despite what the company said was a subdued economic climate and difficult trading environments.
TFG has a portfolio of 28 leading fashion and homeware brands in 32 countries on five continents, offering broad LSM appeal from value to upper end. TFG London comprises high quality fashion brands while TFG Australia primarily consists of the Retail Apparel Group (RAG) with five speciality brands focused on fashionable mid-market and value segments..
Group retail turnover for the six-month period grew by 28.6 percent to R15.9 billion, with turnover growth of 8.4 percent for TFG Africa, 50.7 percent for TFG London and 170.7 percent for TFG Australia. Including comparable numbers for Hobbs and RAG, acquired during the previous financial year, turnover grew by 2.3 percent and 14.9 percent respectively for TFG London and TFG Australia. TFG Africa achieved comparable store turnover growth of 4.8 percent.
Total headline earnings grew by 14.3 percent to a record R1.2 billion.
TFG has declared an interim dividend of 330c per share, an increase of 1.5 percent.
Chief executive Anthony Thunstrӧm said Group cash turnover growth was 39.9 percent, with good growth of 9.8 percent for TFG Africa. “In line with the Group’s strategy, the cash versus credit turnover split is well diversified at 72:28 with a split of 55:45 for TFG Africa.” Group credit turnover growth of 6.8 percent was driven by growth in the active account base.
With continued focus on working capital management, the Group reported free cash flow of R988m, equivalent to 85 percent of net profit after tax.
The Group’s outlets totaled 4 041 in 32 countries at end-September 2018. During the past six months, as part of its capital optimisation programme, TFG Africa opened 22 outlets and closed 26. TFG London opened 68 stores and closed 73, while TFG Australia opened 22 outlets and closed six.
TFG has brought two more TFG Africa brands online ‒ Donna and The FIX. Of the Group’s 28 brands, 22 now offer cybershopping, contributing to 7.9 percent of Group turnover. “TFG London’s comprehensive omni-channel offering enabled online turnover growth of 15 percent for this channel, in a market where trading has shifted rapidly from high street to online retail,” said Thunstrӧm.
In the various merchandise categories, Group clothing turnover grew by 36.1 percent, while homeware and furniture grew 7.8 percent, jewellery 2.7 percent and cosmetics 1 percent. Group cellphone turnover decreased by 2.6 percent.
The retail net debtors’ book of R7,1 billion grew by 2.7 percent year on year.
“We expect trading conditions to remain challenging in all three of our major territories, as consumer spending and business confidence remain under pressure,” said Thunstrӧm. “However, TFG is resilient due to its strategic focus on diversification, cost control, working capital optimisation and investment in digital transformation.
“The Group has a comprehensive brands stable with different levels of maturity and offers diverse, innovative products and creative customer experiences.”
The company said that the second half of the Group’s financial year will depend heavily on Black Friday, Cyber Monday and festive season trade. TFG London results remain sensitive to department store and high street retail reorganisation.
“Retail trade performance for October was at similar levels to the first half across TFG Africa, TFG London and TFG Australia,” said Thunstrӧm.