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 in South Africa despite challenging macroeconomic conditions, high interest rates, and global retail headwinds.

• Delivered positive operating leverage, improved margins, and significant reduction in net debt, while maintaining a resilient and adaptive strategy focused on growth and efficiency.

• Final dividend increased by 33%, full-year dividend up 9.4%, and net debt reduced by over 30% to R4.9bn.

• Expanded store footprint with 272 new stores, optimized existing locations, and closed 106 unprofitable stores; continued investment in omni-channel and supply chain capabilities.

• Strategic investments in supply chain, omnichannel, and brand portfolio have positioned the group to compete against new entrants like SHEIN, Temu, and Amazon.

Financial highlights

• Group EBITDA grew 10.9% year-over-year to R11.6bn; EBIT up 9.9% to R5.95bn; EBIT margin increased to 10.6%.

• Headline EPS at 970.7c, flat year-over-year due to higher finance costs and tax; return on capital employed at 14.6%.

• Net debt to EBITDA improved to 0.76x from 1.21x; inventories down 11.6%.

• Total dividend up 9.4% year-over-year; strong cash generation from reduced CapEx and inventory.

• 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 high interest rates and cost of living pressures.

• Margin pressure anticipated in the UK and Australia, but consumer confidence may improve as interest rates are forecast to drop.

• Medium-term targets: Africa operating margin at 14%, group ROCE in high teens.

• CapEx forecast for FY25: R1.7bn in Africa, R2.2–2.3bn for the group.

• Focus remains on leveraging recent R10bn investment in ecosystem, ramping up new mega-DC, and expanding omni-channel capabilities.