In its latest half-year results, the Foschini Group revealed it had closed 120 underperforming stores across Africa in the six months to September, while opening 41. More closures are planned, with another 60 to 80 to go in the second half. But while its physical footprint is shrinking, online sales are growing rapidly, jumping 53% to R2.2 billion, largely thanks to its Bash platform.
Where the stores are closing
Most of the stores closed as their leases expired, and almost half were in struggling city centres. The closures cut TFG Africa's trading space by 2.6% and freed up R190 million in working capital, leaving it with 3,585 stores in six countries. Across all its businesses, including the UK and Australia, the group closed 178 stores and opened 71. The closures were part of a wider cost drive that removed R257 million from TFG Africa, R184 million of it from stores. TFG estimates that about 20% of the turnover from the closed stores will move to its other stores or to Bash. And despite the closures, TFG says more than 95% of affected employees have been moved into other roles.
How Bash is changing TFG
Online shopping now accounts for almost 11% of TFG's African sales, up from 7.4% a year earlier. And the pace is picking up: online sales grew 40.2% in the first half of last year, and 49.2% for the full year to March. The results don't say whether Bash is profitable yet. BashStore, which lets store staff sell products through a Bash device, grew its sales 65.4% to R326 million, and TFG estimates its online capabilities have helped it avoid around R1.3 billion in capital spending. As CEO Anthony Thunström put it, "Our stores are introducing customers to online shopping, and digital discovery is bringing them back into stores."
The African business is holding up, with sales up 3.8%, ahead of the 1% growth in the wider clothing market, and its operating profit rose 2.7%. Thunström said TFG Africa grew sales, profit and market share in a tough six months. The group as a whole is under more pressure: headline earnings per share fell 6.8%, dragged down by its UK and Australian businesses, and TFG Africa's sales slipped 0.7% in the five weeks to 31 October. TFG expects higher fuel prices and rising interest rates to keep shoppers cautious. So the shop floor looks set to keep shrinking while the app does more of the selling.
