Business

Major South African retailer takes a hit in Australia and the UK

Luke Fraser

 ·7 Nov 2025

The Foschini Group (TFG) has seen a decline in earnings amid significant challenges in South Africa, the UK, and Australia. 

In its results for the six months ended 30 September 2025, TFG saw its revenue increase 12.2% to R31.4 billion. 

However, basic earnings per share (EPS) were 21.0% lower at 290.8 cents, and Headline earnings per share (HEPS) were 21.3% lower at 292.6 cents.

The group said that sentiment and discretionary spending in South Africa remained subdued despite moderating inflation and recent interest rate cuts. 

Sales in South Africa grew 5.3%, supported by a strong start to winter trade. However, winter activity softened during June and September, which negatively impacted sales. 

During the period, 47 stores were opened and 42 were closed, resulting in TFG Africa now operating out of 3,619 stores across six countries.

“Whilst costs were well maintained, winter clearance markdowns, necessitated by the tougher than expected trading environment, reduced gross margins by 90 basis points,” said the group.

“This resulted in negative operating leverage leading to a 9.7% decline in segmental EBIT.” 

In the UK, sales increased by 69.0% when including White Stuff, and by only 0.7% when excluding White Stuff. 

The group said that trading in existing brands continued to be negatively affected by the prolonged weakness in the UK economy. 

TFG stated that management’s efforts to protect the operating profit margin through cost containment and reduction initiatives could not fully mitigate inflationary pressures. 

Gross margins decreased by 370 basis points to 64.1%, mainly due to the acquisition of White Stuff, which trades at a lower margin.

In Australia, the group’s sales for the period contracted by 0.5% in AUD as discretionary spend remained subdued. 

This was due to expense growth being ahead of sales, driven by costs of new stores and continued inflationary pressures; which saw EBIT dropping by 18.4%. 

Amid the challenging environment, TFG dropped its interim dividend by 18.8% to 130.0 cents per share (Sept 2024: 160.0 cents per share). 

However, the TFG board believes that TFG shares are trading at a discount to their intrinsic value and has initiated a share repurchase. 

The company is looking to repurchase R1.0 billion in shares, and has repurchased R377 million in shares by 30 September 2025. 

Outlook

TFG said that it will continue to navigate weak macroeconomic conditions across its key markets. 

In South Africa, consumers remain under pressure despite inflation easing somewhat, as weak GDP growth and high unemployment persist in hindering their economic recovery. 

In the first half of FY 2026, the company said that it started against a higher base, which included last year’s two-pot withdrawals.

“While the first half has been difficult, the Group remains focused on operational resilience, prudent capital allocation, and leveraging its platform strengths and digital channels to drive growth,” it said.