Foschini ramps up African footprint

"Most African countries, because they're coming off such a low base have very high growth rates. We think there's quite a lot of business to be done, we're getting more and more active in Africa - everyone is doing the same," the company's financial director, Ronnie Steyn told I-Net Bridge/BusinessLIVE.

The retailer's portfolio consists of 14 trading brands, ranging from fashion, jewellery, accessories, cosmetics, sporting and outdoor apparel and equipment to homeware and financial services.

TFG, through corporate-owned stores, currently trades out of 70 stores outside of SA, in countries such as Namibia, Botswana, Zambia and Swaziland.

The company joins a growing list of local players manoeuvring into other African territories, as the often-quoted one billion African consumers ripe for the picking becomes the next hot ticket.

Upmarket retailer Woolworths (WHL) is in the throes of a "big push" into Africa, with plans to add 16 stores this year taking the total number of African stores to 60 in the current financial year.

Nigeria's decision to lift a ban on imported textiles has also unleashed a flurry of excitement - the country is predicted it to be the world's fastest growing economy between now and 2050.

Ackerman's owner, Pepkor is opening 50 outlets in a 100 million rand first phase expansion plan into Nigeria.

TFG on Thursday reported an increase in turnover of 18.5% to R5.4 billion and headline earnings per share of 25.6% to 341,9c in the six months to end September.

The group declared an interim dividend of 190 cents, an increase of 37.7% per share.

Steyn credited the solid results to improved consumer spending, advancement in the group's supply chain and the setting up of a centralised CRM division.

Though high debt levels and unemployment remain a concern, consumers have benefitted from decades-low interest rates - a boon for largely credit-based retailers like The Foschini Group and rival Truworths (TRU).

TFG said credit sales as a percentage of total sales increased to 63.1% from 61.8% for the period under review.

CEO Doug Murray said the group's Foschini division which comprises Foschini, Donna Claire, Fashion Express and Luella increased its store base by 16 to 500 during the period with clothing sales increasing by 20.6%, while the @home division increased sales by 15.5% to R350 million.

And despite the 2010 FIFA World Cup inflated base, the sports division trading as Totalsports, Sportscene and Due South grew its clothing turnover by 13.7%.

American Swiss Jewellers, Sterns and Matrix, reported a turnover of R592 million, while Exact increased clothing sales by 27.4% and menswear division Markham, with 256 stores, increased its clothing sales by 22.3%.

RCS Group, in which TFG holds a 55% share with the balance held by Standard Bank performed well during the period with net profit before tax increasing by 24.7% to R151.9 million.

It successfully raised R1.5 billion through its domestic medium-term note programme to fund its future expansion through a mixture of long- and short-term paper, and now has surplus funding of about R1 billion which it will use to support its future growth.

Murray said that retail turnover for the first five weeks of the second-half had continued to be encouraging, though some caution was warranted given the very difficult and fragile global financial environment.

"We remain confident that we can again deliver a favourable result for the second half albeit off a very strong comparative base. The second half is always heavily dependent on Christmas trading," he said.