The Foschini Group (TFG) H1 2025 earnings summary

Executive summary

• Group gross profit rose 2.5% to a record ZAR 12.8 billion, with gross margin up 220 bps to 49.5% year-over-year, despite a challenging macro environment.

• Completed 12-18 months of strategic consolidation and investment, entering a new business cycle with early positive indicators and positioned for market share gains.

• Profitable growth expected to enhance shareholder returns, with a focus on margin management, operational efficiency, and disciplined cost control.

• Strategic investments in supply chain, digital platforms, and acquisitions (notably Tapestry and White Stuff) are driving scale and diversification.

• Interim dividend raised by 6.7% to 160.0 cents per share, reflecting confidence in margin evolution and improved post-period trade.

Financial highlights

• Group revenue contracted by 1.4% to ZAR 28 billion due to a high prior year base and tough trading conditions.

• Operating profit declined 3.4% and headline earnings per share (HEPS) fell 5.6% year-over-year to 371.6 cents.

• Net debt to EBITDA improved to 1.18x from 1.3x; return on capital employed increased to 14.1%.

• Inventories normalized and healthy, up 7.5% mainly in TFG Africa due to prior low levels from port delays.

• Interim dividend increased by 6.7% to 160.0 cents per share.

Outlook and guidance

• Focus remains on margin improvement, inventory management, and cost control, with further gross margin improvement expected in South Africa and Australia.

• Core business in South Africa expected to grow 7%-10% annually over the next 4-5 years.

• Portfolio of healthy brands and a rapidly scaling platform provide runway for growth and increased shareholder returns.

• Dividend cover expected to remain at 2.75x, in line with last year.

• White Stuff acquisition in the UK expected to diversify and strengthen the portfolio, with potential for strong growth.