Wrap Text
THE FOSCHINI GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1937/009504/06)
Ordinary share code: TFG
ISIN: ZAE000148466
Preference share code: TFGP
ISIN: ZAE000148516
('TFG' or 'the Company' and together with its affiliates 'the Group')
TRADING UPDATE FOR Q4 FY2022 AND FURTHER TRADING STATEMENT FOR THE TWELVE
MONTHS ENDED 31 MARCH 2022
TRADING UPDATE FOR Q4 FY2022
SALIENT FEATURES
- Solid performance in all operating territories continued into Q4
FY2022 with Group retail turnover growth of 23,7% compared to Q4
FY2021;
- Another record quarter turnover performance from TFG Africa in terms
of Rands achieved with retail turnover growth of 16,1% in Q4 FY2022
compared to Q4 FY2021 (like-for-like retail turnover growth of
11,5%), which is indicative of further, significant market share
gains;
- Strong cash retail turnover growth for TFG Africa of 18,0% for Q4
FY2022 compared to Q4 FY2021 and 35,9% for the 12 months ended 31
March 2022. Cash retail turnover now contributes 71,1% to total TFG
Africa retail turnover;
- Above expectation performance from TFG Australia, with retail
turnover growth of 11,5% (AUD) in Q4 FY2022 compared to Q4 FY2021 in
the wake of the lifting of most of the lockdown restrictions in
November 2021, although remaining border restrictions were only
lifted mid-March 2022;
- TFG London accelerated its improved performance trajectory in Q4
FY2022 with retail turnover growth of 91,6% (GBP) compared to Q4
FY2021;
- Group online retail turnover growth of 11,7% for the 12 months ended
31 March 2022, contributing 10,2% (FY2021: 12,0%) to total Group
retail turnover;
- Continued investment in growth through organic investments (including
over 300 store openings for the Group in FY2022), an increase in
omnichannel investments and penetration in all territories and
manufacturing capacity in Africa through strategic acquisitions, as
previously announced.
OPERATING CONTEXT
POST-COVID-19 RECOVERIES
The Group continued its strong post-COVID-19 recovery during the fourth
quarter of FY2022. All of the Group's outlets delivered strong trading
performance as economic activity resumed in the wake of reduced
restrictions on movement and travel. In South Africa, the restrictions
remained at adjusted Level 1 during the quarter and the National State of
Disaster was terminated on 4 April 2022. In Australia, the COVID-19 numbers
accelerated significantly since January 2022, but the earlier stringent
restrictions have not been reinstated. On 24 February 2022 the UK became
the first major Western government to end all legal COVID-19 restrictions
in England.
KWAZULU-NATAL ('KZN') CIVIL UNREST
As previously announced on the JSE Stock Exchange News Service ('SENS'),
198 South African stores were looted and damaged to varying degrees by the
civil unrest experienced in the KZN province and parts of the Gauteng
province. The Group reopened 174 of these stores by the end of March 2022.
The remainder of the stores will only reopen from April 2022 onwards and 2
stores will not be reopened. SASRIA payments of R540 million have been
received to date, while the Business Interruption claim is expected to be
finalised by the end of 2022 calendar year.
ESKOM LOAD SHEDDING
TFG Africa lost a further 82,000 trading hours during the quarter due to
the implementation of load shedding across all provinces in South Africa.
TFG AFRICA PERFORMANCE UPDATE
TFG Africa's retail turnover grew by 16,1% during Q4 FY2022 compared to the
same period in the previous financial year. This is a pleasing and record
Rand turnover performance and indicative of further, significant market
share gains, despite the highly competitive retail environment and the
increasing pressure on the consumer wallet. All merchandise categories grew
retail turnover during Q4 FY2022 compared to the same period in the prior
year. Retail turnover growth was favourably supported by the Group's strong
localised, quick response clothing supply chain and sourcing model, which
provided valuable insulation against international supply chain disruptions
while at the same time improving TFG Africa's apparel margins.
TFG Africa's like-for-like retail turnover growth has been particularly
pleasing with growth of 11,5% in Q4 FY2022 and was achieved at planned
product margins.
The growth in TFG Africa's retail turnover compared to the same periods in
the previous financial year in the respective merchandise categories were
as follow:
Q1 April Q2 July Q3 Oct Q4 Jan to
to June to Sept to Dec March
Merchandise category 2021 2021 2021 2022
Clothing 124,7% 37,2% 20,5% 20,2%
Homeware 65,4% 19,5% 26,4% 17,4%
Cosmetics 80,5% (7,5%) (4,7%) 4,5%
Jewellery 198,4% 2,6% 7,6% 6,1%
Cellphones 40,6% 8,3% (1,9%) 1,8%
Total TFG Africa 107,6% 28,0% 17,3% 16,1%
FY 2022
Contribut
ion to
H2 Oct TFG
H1 April 2021 to Africa
to Sept March retail
Merchandise category 2021 2022 FY2022 turnover
Clothing 72,2% 20,4% 38,4% 75,1%
Homeware 38,5% 22,6% 29,0% 7,4%
Cosmetics 23,5% (1,3%) 8,2% 3,2%
Jewellery 49,0% 7,0% 21,3% 4,8%
Cellphones 22,5% (0,2%) 9,4% 9,5%
Total TFG Africa 59,5% 16,0% 32,3% 100,0%
Cash retail turnover for Q4 FY2022 grew by 18,0% compared to the same
period in the previous financial year and by 35,9% for the full year (R21,5
billion). Cash retail turnover contributed 71,1% to TFG Africa's total
retail turnover for the 12-month period.
Given the strong cash turnover growth and the prevailing economic
conditions we remain cautiously conservative with our credit lending
criteria and the retail debtors' book remains conservatively provided.
Average approval rates for new accounts in H2 FY2022 increased marginally
compared to H1 FY2022 as customer payments and therefore credit book
performance continued to exceed expectation. For Q4 FY2022 credit retail
turnover grew by 11,3% compared to the same period in the previous
financial year and grew by 24,2% for the full financial year on the back of
better than expected payments from our credit customers and continued
improvements on the book quality. Provisioning levels have been retained
given the ongoing pressure on the South African consumer.
Online retail turnover for Q4 FY2022 grew by 13,5% despite a high base in
the same quarter in FY2021. For the 12-month period, online retail turnover
contributed 3,1% to total TFG Africa retail turnover and the Group's
omnichannel retail strategy remains a priority.
Post COVID-19, TFG Africa continued to accelerate store growth and store
optimisation due to organic opportunities and favourable market related
rental agreements that were secured with landlords. TFG Africa opened 274
new stores during the year in locations where its brands were previously
not adequately represented.
TFG AUSTRALIA PERFORMANCE UPDATE
TFG Australia saw significant retail turnover growth as multiple state
governments across Australia relaxed COVID-19 restrictions to allow greater
freedom of movement for citizens. Retail turnover for Q4 FY2022 grew by
11,5% (AUD) compared to Q4 FY2021 and 14,5% (AUD) in H2 FY2022 compared to
the same period in the previous financial year. For the full year, retail
turnover grew by 24,0% (AUD). Like-for-like growth of 15,8% was achieved,
which was very pleasing.
Online retail turnover for the full year grew by 26,9%, (AUD) now
contributing 9,3% (AUD) to total TFG Australia retail turnover.
The growth / (decline) in TFG Australia's retail turnover compared to the
same periods in the previous financial year was as follow:
Q1 April
to June Q2 July to Q3 Oct to Q4 Jan to
2021 Sept 2021 Dec 2021 March 2022
Retail turnover
movement ' AUD
denominated 130,5% (16,6%) 16,9% 11,5%
H1 April H2 Oct
to Sept 2021 to
2021 March 2022 FY2022
Retail turnover
movement ' AUD
denominated 39,2% 14,5% 24,0%
During the past year, despite the Government COVID-enforced restrictions,
TFG Australia continued its organic expansion and opened 43 new outlets,
including a further 12 concessions. At the year-end, TFG Australia was
trading from 576 outlets.
TFG LONDON PERFORMANCE UPDATE
TFG London's performance continued to improve as borders opened, the
recommencement of formal events and as employers encouraged their staff to
return to the office in most cases for at least part of the working week.
Increased footfall and growing demand for our key categories have supported
strong sales in the region. Q4 FY2022 delivered retail turnover growth of
91,6% (GBP)compared to the same quarter in the previous financial year. For
the full year, retail turnover grew by 57,3% (GBP).
The growth in in TFG London's retail turnover compared to the same periods
in the previous financial year was as follow:
Q1 April
to June Q2 July to Q3 Oct to Q4 Jan to
2021 Sept 2021 Dec 2021 March 2022
Retail turnover
movement ' GBP
denominated 103,6% 41,8% 25,5% 91,6%
H1 April H2 Oct
to Sept 2021 to
2021 March 2022 FY2022
Retail turnover
movement ' GBP
denominated 65,6% 50,5% 57,3%
Online retail turnover from TFG London's own sites grew 21,3% (GBP) in Q4
FY2022 off a high base during the same quarter in FY2021, while retail
turnover via third party online channels was purposely restricted and grew
by only 0,1% (GBP). For the full year, online retail turnover grew 13,8%
(GBP) and contributed 45,2%(GBP) (FY2021: 62,5%) to TFG London's total
retail turnover.
GROUP PERFORMANCE UPDATE
Overall, the Group delivered a robust performance during Q4 FY2022 with
Group retail turnover growth of 23,7% compared to the same period in the
previous financial year with all divisions reporting high double-digit
growths. Group cash retail turnover for Q4 FY2022 grew by 26,9%,
contributing 81,7% to total retail turnover for the three-month period.
Group credit retail turnover grew by 11,3% during Q4 FY2022 when compared
to the same quarter in the previous financial year. Online retail turnover
for the Group grew by 12,1% (TFG Africa: 13,5%) for Q4 FY2022 compared to
the same period in the previous financial year.
For the 12 months to 31 March 2022, total Group retail turnover grew by
31,6% compared to the same period in the previous financial year,
demonstrating the Group's strong recovery from the COVID-19 disruptions.
Group cash retail turnover grew by 33,6% compared to the same period in the
previous financial year, contributing 79,9% (FY2021: 78,7%) to total Group
retail turnover for the 12 months to 31 March 2022.
Group online retail turnover grew by 11,7% (12 months to 31 March 2021:
33,4%) for the 12-month period, contributing 10,2% (FY2021: 12,0%) to total
Group retail turnover evidencing the continued strong online demand for all
our brands.
OUTLOOK
The Group will continue to invest in its key strategic initiatives to
further strengthen its differentiated business model, which has proven to
be resilient and has consistently delivered superior growth in all its
operating territories. Further, the Group made progress on its key
strategic objectives and its speciality brand business portfolio which
remains very well positioned for further organic and inorganic growth,
supported by a strong Group balance sheet.
Operationally, in light of the current macroeconomic conditions, there will
be a continued focus on further improving gross profit margins, expense
control, working capital management and disciplined capital allocation.
Trade since the year-end has been encouraging across all three of our
trading territories. For the trading month of April 2022, TFG Africa had
retail turnover growth of 17,1%, TFG London had growth of 62,3% (GBP) and
TFG Australia had growth of 10,9% (AUD), all compared to April 2021.
As announced on SENS on 7 March 2022, the Company entered into a sale and
purchase agreement to acquire the entire issued share capital of Tapestry
Home Brands Proprietary Limited ('Tapestry'). Tapestry is a prominent
direct-to-consumer, vertically integrated designer, manufacturer and
omnichannel cash retailer of home furnishings serving consumers' living and
sleeping needs, targeting the middle to upper LSM markets. The transaction
will provide TFG with exposure to new products and categories as well as
new customers that will complement the current TFG customer base in
existing categories. The transaction is in line with TFG's stated strategy
of vertical integration in key product categories, to protect and improve
margins, and the continued development of its quick response local
manufacturing capability. The transaction is subject to the fulfilment of a
number of conditions precedent, one being approval from the relevant
competition authorities and the Takeover Regulation Panel.
FURTHER TRADING STATEMENT FOR THE TWELVE MONTHS ENDED 31 MARCH 2022
Shareholders are referred to the trading statement released on SENS on 25
April 2022 and are advised that the Group's basic and diluted headline
earnings per share for the year ended 31 March 2022 are expected to be
within the following ranges:
Reported Expected
Year ended
31 March
2021 Year ended 31 March 2022
Cents Cents %
Basic headline
earnings per 995,4 to
ordinary share 197,9 1 015,2 403,0% to 413,0%
Diluted headline
earnings per 991,9 to
ordinary share 197,2 1 011,6 403,0% to 413,0%
Basic and diluted earnings per share are expected to be within the
following ranges:
Reported Expected
Year ended
31 March
2021 Year ended 31 March 2022
Cents Cents %
Basic earnings per
ordinary share -614,0 859,6 to 921,0 240,0% to 250,0%
Diluted earnings
per ordinary share -611,8 856,5 to 917,7 240,0% to 250,0%
The expected earnings ranges have been impacted, inter alia, by the
following:
- The COVID-19 pandemic and the related government-enforced lockdowns
and related store closures in all 3 of our main trading territories
during the 12 months ended 31 March 2021 ('prior period'), as
previously reported;
- The dilution arising from the successfully concluded rights offer, as
announced on SENS on 11 August 2020;
- The acquisition of certain commercially viable stores and selected
assets of Jet in South Africa (effective 25 September 2020) and in
Botswana, the Kingdom of Eswatini, Lesotho and Namibia (effective on
various dates in December 2020 and January 2021). The inclusion of a
bargain purchase gain on acquisition of R709,0 million in the prior
period specifically affected basic earnings per share and diluted
earnings per share;
- The R2,7 billion after tax non-cash impairment of the carrying values
of TFG London's goodwill and intangible assets in the prior period
specifically affected basic earnings per share and diluted earnings
per share;
- The civil unrest experienced in the current period in South Africa in
July 2021, as previously reported; and
- The Group's continued strong trading performance across all 3 our
main territories in Q3 FY2022, as previously reported, and in Q4
FY2022, as reported above.
ANNUAL FINANCIAL RESULTS
Shareholders are advised that the Group expects to release its annual
financial results for the 12 months ended 31 March 2022 on SENS on Friday,
10 June 2022.
A live webcast of the annual financial results presentation will be
broadcast at 10:00 am (SAS) on Friday, 10 June 2022. A registration link
for the webcast will be available on the Company's website at
www.tfglimited.co.za. The slides for the annual financial results
presentation will be made available on the Company's website prior to the
commencement of the webcast. A delayed version of the webcast will be
available later the same day.
The forecast financial information on which this trading statement is based
has not been reviewed and reported on by the Company's external auditors.
Cape Town
20 May 2022
Sponsor:
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 20-05-2022 09:32:00
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