SHARES in The Foschini Group (TFG) leapt 2.5 percent on the JSE on Friday after the company beat load shedding and depressed consumer spending power to report stronger sales volumes for the quarter to end March.
This stronger performance is now expected to yield a big jump in earnings for the full year period, it said on Friday.
Unlike South African grocery-focused retailers, which have recently been reporting subdued sales, volumes in Foschini have been stronger. Pick n Pay is moving to establish and strengthen its apparel division, while Massmart on Thursday reported weaker sales, except for its Makro division, which lifted income.
JSE investors in TFG on Friday cheered its stronger turnover in its Australia, London and Africa segments. The company’s share price, which has strengthened by as much as 14 percent in the year-to-date period, was 2.5 percent stronger in afternoon trade on the JSE after the release of its quarterly and full year trading updates.
“The Group continued its strong post-Covid-19 recovery during the fourth quarter of FY2022. All of the Group’s outlets delivered strong trading performance as economic activity resumed in the wake of reduced restrictions on movement and travel,” it said.
This came after its continued investment in “growth through organic investments”, which saw it open 300 new stores during the year period to the end of March. It also witnessed an “increase in omnichannel investments and penetration in all territories and manufacturing capacity in Africa” through acquisitions.
This underpinned TFG’S solid performance in all operating territories, translating to a group retail turnover growth of 23.7 percent compared to the previous contrasting period.
In its Africa territory, underpinned by South Africa, TFG lifted turnover in rand terms by 16.1 percent, cementing its growing market presence. The Australian division raised turnover by 11.5 percent in Australian dollar terms “in the wake of the lifting of most of the lockdown restrictions” in November.
The London operating division also improved its performance after raising turnover by 91.6 percent.
TFG rebounded from headwinds, especially in the South Africa market, despite suppressed consumer demand and disruptions from the Covid-19 lockdown restrictions. It was also affected by power outages that translated to a loss of more than 82 000 trading hours in the South African market.
In the full year period, TFG was affected by the civil unrest that broke out in KwaZulu-Natal and Gauteng last year. As many as 198 of its South African stores were looted and damaged and to date, the group had reopened 174 of these stores.
“The remainder of the stores will only reopen from April 2022 onwards and 2 stores will not be reopened,” the company said.
In spite of this, TFG’S Africa segment grew turnover “despite the highly competitive retail environment and the increasing pressure” on consumer disposable incomes.
“Retail turnover growth was favourably supported by the Group’s strong localised, quick response clothing supply chain and sourcing model, which provided valuable insulation against international supply chain disruptions while at the same time improving TFG Africa’s apparel margins.”
As a result of the stronger fourth quarter performance, basic headline earnings per share for the full year period to end March are now expected to be between 403 percent and 413 percent stronger at between 995 cents and 1015 cents per share.
The company has also projected basic earnings per share for the same period to be at least 240 percent higher at a minimum of 856 cents per share.
BUSINESS REPORT ONLINE