TFG invests in backup power to insulate turnover from load shedding

After losing 132 000 trading hours as a consequence of load shedding in the first half of 2023, fashion and homeware retailer The Foschini Group has announced that it will be investing in several initiatives to protect its business from Eskom’s inefficiencies.

The JSE-listed retailer on Friday reported that its priority stores throughout the country will be equipped with battery backup power, while several other TFG stores will receive mobile point of sale devices to enable the continuance of trade during dark times.

TFG says these interventions – estimated to cost about R200 million in additional capex – will protect approximately 68% of its turnover in South Africa.

Consistent power cuts over the last six months to end September 2022, has, according to TFG, meant that the group lost 2.5 times more trading hours than it did in the previous period.

Read: TFG loses 99 000 shopping hours in 3 months on load shedding

Record interims

Despite the impact of load shedding and other headwinds, the group has reported a strong performance, with a 23% spike in group turnover to R25.1 billion, as well as a 23.5% rise in group retail turnover to R23.5 billion.

The owner of 33 labels – including well-known brands, Foschini, The Fix, Sportscene, Jet, @home and American Swiss – reported a 24.7% rise in gross profit to R11.6 billion, while operating profit before finance costs strengthened by 40.7% to R2.6 billion.

Headline earnings per share (Heps) increased by 17.9% to R1.5 billion, with the group declaring an unchanged interim dividend of 170 cents this period.

The group generated R1.5 billion in cash from its operations this period. This, together with debt, was used to fund “profitable acquisitions and organic growth”.

“In TFG Africa, the post-pandemic economic recovery is progressing gradually, showcased by surprising resilience in consumer spending, despite the high unemployment rates, reduced consumer confidence and increased levels of Eskom load shedding,” CEO Anthony Thunström says.

The group’s Australian and English operations are also going strong, both reporting growth in turnover.

TFG Australia reported a 56.3% growth in turnover, coming off a relatively low base in the previous period which was led by significant Covid-19-related store closures.

TFG London registered a strong performance in the first quarter of the period, supporting the 21.2% increase in retail outlet turnover during the first half of the 2023 period.

Read: TFG launches mobile network

Outlook

Despite expecting increasing pressure on trading conditions and consumers’ pockets, the group says it will continue to invest in growth initiatives that will help strengthen its business model.

Effort will also go into integrating the newly acquired Tapestry business into TFG to ensure maximum value creation for the group.

TFG further added that it is looking to the upcoming Black Friday and Christmas shopping seasons to boost its performance in the second half of the year.

“The group continues to demonstrate its resilience and agility and is best positioned to trade through cyclical headwinds and stretched consumer wallets in all our territories,” Thunström says.

“We continue to invest in our key strategic initiatives to further strengthen our differentiated business model. We have made progress on our strategic objectives and speciality brand business portfolio and continue to eye organic and inorganic growth opportunities.

“A specific focus will be on the Tapestry business to maximise the value from our investment,” Thunström adds.

Read: ‘Back-to-the-office’ bumper results for Truworths