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THE FOSCHINI GROUP LIMITED - TRADING UPDATE FOR THE FIRST 22 WEEKS OF THE 2021 FINANCIAL YEAR

Release Date: 15/09/2020 15:22
Code(s): TFG TFGP     PDF:  
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THE FOSCHINI GROUP LIMITED
Reg. No.: 1937/009504/06
Share code: TFG - TFGP
ISIN: ZAE000148466 ? ZAE000148516
(?TFG?)


TRADING UPDATE FOR THE FIRST 22 WEEKS OF THE 2021 FINANCIAL
YEAR AND TRADING STATEMENT FOR THE 6 MONTHS ENDING 30 SEPTEMBER 2020
This trading update should be read in conjunction with the
trading updates published on SENS on 15 May 2020, 18 June 2020
and 13 July 2020. These updates provide further background
with regard to store closures and store re-openings in the
Group?s three main territories due to government-enforced lockdowns because of the global COVID-19 pandemic. Group
Trading conditions across all three of the Group?s major
territories, South Africa, the United Kingdom and Australia,
continue to be challenging. With all three of these
territories in economic recession following the effects of
COVID-19, consumer spending has been under significant
pressure, exacerbated by further job losses and social
distancing rules. In South Africa, continued electricity load
shedding has further impacted on the country?s economy
(approximately 15,000 trading hours have been lost to load
shedding during the months of May to August). In Australia,
trade has been impacted by the re-introduction of lockdown
measures in certain of the states. The UK stores started re-
opening from mid-June, with a very slow ramp up as the social
distancing rules and European restrictions remain largely in force.
Against this backdrop, the Group?s retail turnover for the 22
weeks ended 29 August 2020 declined by 29,7% compared to the
same period in the previous financial year. Customers
continue to prefer online shopping with growth in e-commerce
turnover for the Group of 29,7% for the 22 weeks compared to the same period in the previous financial year.
The retail turnover decline in each of the Group?s business
divisions during the 22-week period ended 29 August 2020,
compared to the same period in the previous financial year, was as follows:
Business Currency Total retail Contribution
division turnover to Group
decline retail
turnover
TFG Africa* R (26,4%) 65,2% TFG London# # (58,1%) 15,8% TFG Australia* A$ (28,3%) 19,0% Group* R (29,7%) 100,0%
* Given the number of store closures at various periods during
the 22 weeks ended 29 August 2020, providing a comparable
retail turnover number for the period is not considered to be meaningful.
# TFG London trades, inter alia, through department store
concessions. As concessions by nature change floor space on a
continuous basis, a comparable retail turnover number is not calculated. TFG Africa
TFG Africa?s retail turnover for the 22 weeks ended 29 August
2020 declined 26,4% compared to the same period in the
previous financial year. While trade has improved in line with
the easing of lockdown restrictions, it remains volatile.
Homewares and cellphones, comprising nearly 23% of TFG
Africa?s retail turnover, have however consistently showed
turnover growth since the re-opening of stores on 1 May 2020.
Online turnover, comprising 4,5% of TFG Africa?s turnover,
continues to exceed management?s expectation with growth in
excess of 100%, for the 22 weeks compared to the same period in the previous financial year.
The change in turnover compared to the same period in the
previous financial year in the respective merchandise categories was as follows: Merchandise category
Total retail turnover (decline) / growth *
Contribut
ion to
TFG
Africa
retail
turnover
1 April 1 April (1 April
? 27 ? 29 ? 29
June July August August August)
Clothing (41,4%) (18,4%) (5,3%) (30,2%) 68,9%
Homeware (25,0%) 6,5% 1,8% (13,2%) 8,6%
Cosmetics (51,5%) (29,8%) (16,7%) (39,9%) 3,9%
Jewellery (70,3%) (20,1%) (10,2%) (46,8%) 4,6%
Cellphones 5,1% 25,6% 32,0% 14,8% 14,0%
Total (38,4%) (13,2%) (2,2%) (26,4%) 100,0%
*Given the number of store closures at various periods during
the 22 weeks ended 29 August 2020, providing a comparable
retail turnover number for the period is not considered to be meaningful.
Cash retail turnover for the 22 weeks ended 29 August 2020
declined 18,0% compared to the same period in the previous
financial year. Merchandise deflation for the same period was 3,7%. TFG Africa credit
TFG continues to deliberately maintain a significantly
restricted credit appetite, with accept rates falling further
down to below 15%. This policy is expected to remain in place
while the macro economic conditions remain negative. As a
result, credit retail turnover for the 22 weeks ended 29
August 2020 has contracted by 37,9% for the first 5 months
compared to the same period in the previous financial year.
Following the reopening of our stores, cash collections
continue to be ahead of management?s expectation; however they are still below pre-pandemic levels. TFG London
TFG London?s pound sterling-denominated retail turnover for
the 22 weeks ended 29 August 2020 declined 58,1% compared to
the same period in the previous financial year. UK stores
began to gradually re-open from June 15th following government
guidelines. However, at the end of August, nearly all central
London stores remained closed given the very significantly
reduced footfall, which largely relies on tourists and office
workers. It remains unclear as to when the majority of our UK
consumers will return to working from their offices or
attending social events, both of which have a direct bearing
on the demand for our UK brands. Online turnover from TFG
London?s own branded websites however increased by 11,9% for
the 22-week period compared to the same period in the previous financial year.
1 April ? July August 1 April ?
27 June 29 August
Retail (68,5%) (42,1%) (37,8%) (58,1%) turnover movement (%) ? GBP denominated TFG Australia
TFG Australia?s Australian dollar-denominated retail turnover
for the 22 weeks ended 29 August 2020 declined 28,3% compared
to the same period in the previous financial year. E-commerce
turnover growth for the period was strong at 68,2% compared to the same 22 weeks in the previous financial year.
All stores were closed on 27 March 2020 in response to COVID-
19 Government restrictions and regulations on social
distancing. The re-opening of stores commenced end April, and
all stores across Australia and New Zealand were reopened by the end of May.
Trade in this business segment has continued to be impacted by
individual states having different levels of restrictions based on the number of active COVID-19 cases.
During August, Government restrictions resulted in store
closures in both New Zealand and Victoria. New Zealand had 17
stores closed for 2 weeks, however these have subsequently re-
opened. Victoria has had 84 stores closed from 2 August.
These stores remain closed and the Victoria State Government
anticipates lifting the lockdown regulations by the end of October.
1 April ? July August 1 April ?
27 June 29 August
Retail (42,4%) 1,7% (23,8%) (28,3%) turnover movement (%) ? AUD denominated Strategic initiatives in dealing with COVID-19
The impact of the COVID-19 pandemic remains dynamic and
continues to evolve at different stages throughout the
different jurisdictions within which we operate. We are
adapting our business as effectively as possible to deal with
the dynamic environment within which we operate and continue
to make significant progress in respect of our cost saving
initiatives through our previously announced Business
Optimisation project. As previously announced, we have
continued to access Government funding, where available to us, in each of our territories of operation.
The successfully concluded rights offer will insulate the
balance sheet during this time of global economic uncertainty
and allow us to further execute on the company?s growth strategy and vision for the future. Trading statement As per paragraph 3.4(b)of the JSE Limited Listings
Requirements, shareholders are advised that the Group?s
interim financial results for the six months ending 30
September 2020 are likely to be at least 20% lower than those
reported for the six months ended 30 September 2019, as follows:
Expected minimum
Reported difference 6 months ended 30
September 6 months ended 30
2019 September 2020
Cents Cents % Basic earnings per
ordinary share 533,4 -106,7 -20,0 Basic headline earnings per
ordinary share 526,7 -105,3 -20,0 Diluted earnings
per ordinary share 530,6 -106,1 -20,0 Diluted headline earnings per
ordinary share 523,9 -104,8 -20,0
Further guidance will be provided when management has a
reasonable degree of certainty over the expected earnings
numbers and prior to the release of the interim financial
results ending 30 September 2020, which is expected to be on or about 5 November 2020.
The forecast financial information on which this trading
update and trading statement is based has not been reviewed
and reported on by the company?s external auditors. Cape Town 15 September 2020 Sponsor: UBS South Africa Proprietary Limited Date: 15-09-2020 03:22:00
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