The Foschini Group (TFG) H2 2024 earnings summary

Executive summary

• Achieved record group revenue of R60.1bn, up 8.9% year-over-year, with strong operational performance and market share gains across key categories despite challenging macroeconomic and retail conditions.

• Operating profit before finance costs rose 9.9% to R5.9bn, with headline EPS of 970.7c and a final dividend up 33% to 200c per share; net debt reduced by over 30% to R4.9bn.

• Strategic investments in supply chain, omnichannel, and brand portfolio, including the Bash platform and JD Sports partnership, have positioned the group for future growth and competition against global entrants.

• Expanded store footprint with 272 new stores and closed 106 unprofitable stores, optimizing the network and supporting omni-channel growth.

• Cash generated from operations surged 76.5% to R12.5bn, supporting growth, acquisitions, dividends, and debt repayment.

Financial highlights

• Group EBITDA grew 10.9% to R11.6bn; EBIT up 9.9% to R5.95bn; operating margin improved to 10.6%.

• Headline earnings per share increased 0.2% to 970.7c; total dividend up 9.4% to 350c per share.

• Gross margin held steady at 47.9%; group inventories 11.6% lower than prior year.

• Net debt to EBITDA improved to 0.76x from 1.21x; ROCE at 14.6%.

• Capex down to R2.0bn, reflecting focus on working capital and fewer new stores.

Outlook and guidance

• Trading conditions expected to remain constrained due to persistent high interest rates, inflation, and cost of living pressures in all territories.

• Focus remains on extracting value from recent investments, ramping up new mega-DC, and expanding omnichannel capabilities.

• Medium-term operating margin target for TFG Africa set at 14%; cautious on consumer environment and margin management.

• Trading update for April/May FY25: TFG Africa (ex-Tapestry) turnover down 2% year-over-year, but sales margin improved to 45.2%.

• Confident in ability to grow and capture additional market share with a robust balance sheet and diversified model.