Our opinion on the current state of TFGThe Foschini Group (TFG) is an international retailer with a portfolio of 28 fashion brands. The company operates 4,083 trading outlets in 32 countries worldwide, including divisions in London, Australia, and a substantial presence in South Africa. One of TFG’s standout achievements has been its ability to establish a successful business in Australia, where many other retailers, such as Woolworths, have struggled. In 2017, TFG acquired the Retail Apparel Group (RAG) in Australia for just over $300 million and has allowed the Australian management team significant autonomy, refraining from micromanaging the business from South Africa.
Over the long term, TFG has consistently performed well in the challenging retail clothing sector in South Africa, where it faces stiff competition from both overseas brands and local retailers. It is regarded as the best of the retail clothing companies on the JSE and is well-diversified internationally, offering a valuable rand-hedge element. Although retail is typically sensitive to the business cycle, the TFG board has demonstrated an impressive ability to manage the company profitably, even in challenging environments where others have failed.
In its results for the six months to 30th September 2024, TFG reported revenue down 1.4% and headline earnings per share down 5.6%. Despite this, online sales grew by 9.9%, contributing 10.7% to total turnover, with its Bash online platform in South Africa achieving impressive growth of 47.9%. The company stated, "...the improvement from the 3.5% decline reported in our 21-week guidance in September 2024 highlights the noticeable improvement in trading activity experienced in all territories since September 2024, and through to November 2024."
In an update on the three months to 28th December 2024, TFG reported group sales up 8.4%, with online sales surging 47.2%. From June 2023, the share has been in a new upward trend, indicating growing investor confidence.
On 27th October 2024, TFG announced the acquisition of the UK fashion and lifestyle retailer White Stuff for an undisclosed amount, further expanding its international footprint.
TFG continues to be a well-managed and resilient company, capitalizing on both its strong international diversification and growing online presence. The company’s ability to adapt to market challenges and expand strategically positions it as a compelling investment. We believe TFG should be accumulated during periods of market weakness for long-term growth potential.
