Moneyweb reported on Monday that TFG has begun a formal consultation under Section 189A of the Labour Relations Act, the step before retrenchment, covering part of its head office. TFG confirmed it. The company said it is reviewing part of its head-office operating model to reduce complexity and lower its cost of doing business. It would not say how many roles are in it.
The shops that stopped earning their place
The cuts at the centre follow the cuts on the shop floor. TFG traded from 4 914 stores across 18 countries at the end of March, 3 432 of them in South Africa. About 300 are marginal, on chief executive Anthony Thunström's own count. Around 100 closed last year. Just over 100 more go this year. Finance chief Ralph Buddle put the logic to investors plainly: the marginal stores cover their variable costs, but that is not good enough. Cutting them lifts the average return. Then the group has to take out overhead at the centre to cater for a smaller base.
What R1.1 billion of Bash sales would have cost in shopfronts
One part of the group has nothing to close. Bash pulls TFG's roughly 40 brands into a single app and website. Online sales in TFG Africa grew 49.2% last year on the back of it, reaching 8.2% of that division's sales and 10% in the fourth quarter. Thunström gave investors a way to size that. The extra R1.1 billion Bash brought in would have needed the equivalent of more than 100 new stores, plus about R500 million in shopfitting and stock, to do physically. The group spent that same year closing a hundred.
Yes, Bash is still a small part of TFG Africa, but its a fast-growing one. All the while, TFG is closing stores and cutting costs elsewhere in the business. So the question must be asked: how big a role could Bash play as the group tries to find its way back up?
