The Foschini Group (TFG) has released its trading update for Q1 FY2022, reporting group turnover growth of 15.8% compared to Q1 FY2020 with group online turnover growth of 23.2% compared to Q1 FY2020, contributing 9.8% (Q1 FY2020: 9.2%) to total group turnover.
While TFG Africa and TFG Australia reported strong performance with turnover growth of 26.8% and 32.7% respectively, compared to Q1 FY2020, TFG London’s trade has outperformed expectations across all three brands with the business generating a positive cash flow in Q1 FY2022.
The group reported cash turnover growth for TFG Africa of 55.5% compared to Q1 FY2020 which now contributed 69.6% to total TFG Africa turnover. Like-for-like turnover growth for TFG Africa of 11.1% was reported for May and June 2021, compared to May and June 2020.
According to the Retailers Liaison Committee, market share gains of 16% for Q1 FY2022 continued in the men’s and women’s categories compared to 10% reported in Q1 FY2021 with the opening of 71 new stores during the quarter while 29 stores were closed.
(April has been excluded from these results with the majority of the group’s stores closed during April 2020 due to the national lockdown).
While most of TFG’s outlets traded strongly during the past quarter, consumer spend, particularly for TFG Africa, remained muted due to uncertainty regarding further Covid-19 outbreaks, extended lockdowns, and the slow pace of the vaccine roll-out. The recent civil unrest has and will continue to impact consumer spend and business confidence, especially where business ability to trade has been hampered throughout the widespread destruction in KwaZulu-Natal and Gauteng.
The third wave of Covid-19 in South Africa resulted in the return to adjusted level 3 lockdown restrictions from the 15th of June 2021, level 4 lockdown restrictions from the 28th of June 2021 and then back to adjusted level 3 lockdown restrictions from the 26th of July 2021.
With respect to TFG Australian, further lockdowns and restrictions have impacted the business since the end of 2021’s first quarter. During the middle of July 2021, over 50% of the group’s stores in Australia were closed or substantially impacted with its two largest stores, New South Wales, and Victoria, currently the most affected.
TFG London’s restrictions (in England with the rest of the UK to follow) have been relaxed since the 19th of July 2021 but a degree of caution remains.
Despite these challenges, TFG has reported that it continues to invest for long-term in line with its strategic priorities, while further strengthening its digital as well as local supply chain and manufacturing capabilities.
Due to the substantial impacts of the various government-enforced lockdowns during the previous financial year, financial comparisons in the current trading update are provided against the first quarter of the 2020 financial year (April 2019 to June 2019).
TFG Africa performance update
TFG Africa grew its turnover by 26.8% in Q1 FY2022 compared to Q1 FY2020, supported by the significant contribution of Jet, acquired from September 2021. Excluding Jet, turnover grew by 4.4% compared to the comparative period in FY2020 despite trade disruptions during Q1. All merchandise categories grew turnover during Q1 FY2022 compared to the corresponding period in FY2020 except for the cosmetics and jewellery spend categories.
TFG Africa’s like-for-like turnover growth (which excludes Jet) has reported growth of 11.1% for the combined months of May and June 2021, compared to May and June 2020.
While cash turnover for the quarter contributed 69.6% to TFG Africa’s turnover, growing by 55.5% compared to the same quarter during 2020’s financial year, credit turnover declined by 10.8% compared to the same quarter during the 2020 financial year and the group continues to restrict and reduce acceptance criteria in line with the prevailing economic conditions.
Online turnover for the quarter grew by 163.2% compared to the same quarter during the 2020 financial year and it now contributes 3% to total TFG Africa turnover (Q1 FY2020: 1.5%).
TFG London performance update
TFG London’s outlets started trading from the 12th of April 2021 in a phased approach following the end of the third national government-enforced lockdown, which started in January 2021. For the three-weeks in April, 62% of its outlets traded while 92% of outlets traded in May. In June, only one concession remained closed with all other outlets trading. On the 15th of May 2021, Debenhams closed its doors for the last time, resulting in the closure of 55 locations and the closure of its online trade.
While casual wear categories have shown improvement during the 2020 financial year, occasion wear continues to lag.
Online turnover from TFG London’s own sites reported strong growth of 12.4% compared to the same quarter in FY2020 while third party online channels decreased by 22% due to the closure of Debenhams and the slower recovery of international markets that are heavily weighted towards third parties.
The contribution of online turnover to TFG London’s total turnover for the quarter was 47.4% (Q1 FY2020: 32.3%).
TFG London has continued to outperform across all three main brands with the group opening 29 new outlets during the quarter, including 17 concessions, while 68 outlets were closed. At the end of the quarter, TFG London traded from 762 outlets.
TFG Australia performance update
The Australian business continued to exceed expectations with turnover growth of 32.7% (AUD) in Q1 FY2022 compared to the same period during 2020’s financially year despite intermittent lockdowns and restrictions.
In Victoria, 96 stores were closed in a full state lockdown for seven days with a further 84 stores closed in metro lockdowns for another seven days.
Online turnover during the reporting period grew by 59.0% compared to the same quarter in 2020, now contributing 7.0% to total TFG Australia turnover (Q1 FY2020: 5.8%).
TFG Australia has opened 15 new outlets during the quarter, including 4 concessions, while 4 outlets were closed. At the end of the quarter, TFG Australia traded from 565 outlets.
Overall, the TFG group delivered a strong performance during the first quarter with growth of 15.8% compared to the same quarter in FY2020 (excluding JET of 1.9% – pro forma management account numbers used to calculate an indicative turnover growth).
Online turnover continues to perform well with growth of 23.2% for Q1 FY2022 compared to the same quarter in FY2020. The contribution of online turnover to total turnover for the quarter was 9.8% (Q1 FY2020: 9.2%).
Source: Propertywheel.co.za | https://propertywheel.co.za/2021/08/the-foschini-groups-online-turnover-grows-by-23-2/