Foschini Group reports headline loss despite strong online sales
South African fashion retailer The Foschini Group (TFG) on Thursday (5 November) reported a headline loss for the six months ended September 2020, citing store closures as a result of the Covid-19 pandemic.
The group reported a headline loss per share of 91 cents, down 117.1% from headline earnings per share of 531.2 cents per share previously.
It also highlighted the dilution impact of its R3.95 billion rights offer, and the the acquisition of 382 stores and selected assets of Jet from Edcon as reasons for its earnings drag.
The effective date of the Jet acquisition was 25 September 2020 and the inclusion of a purchase gain on acquisition of R694.3 million as well as acquisition costs of R14.3 million impacted headline earnings.
Operating profit before acquisition costs, gain on bargain purchase and finance costs declined 88% to R279.8 million, while group revenue was down 25.3% to R13.9 billion.
Group retail turnover was down 26.1% to R12.5 billion. TFG said that new credit accounts fell by 55% as consumers demanded less credit, and marketing was curtailed. The group said it approved less than one in 10 credit accounts (10%) in the reporting period as a “preventative measure”.
This, along with hard lockdown, resulted in credit sales dropping by 34.7% year-on-year.
The big shift to online shopping and the growth of its cellular sector were among the few highlights for TFG. Online turnover now contributes 14.4% to group retail turnover with strong growth for TFG Africa at 115.8%, it said.
TFG did not declare an interim dividend, having declared a dividend of 335 cents per share a year ago.
The company said that trading conditions remain uncertain as consumer confidence remains under pressure and further lockdowns in some overseas markets.
“Any re-introduction of significant lockdowns and store closures across our three business segments would have a further material and negative impact on our business and results of operations in our 2021 financial year,” TFG said.
“We are however confident that the group is well positioned to take advantage of any economic recovery and that our continued investment in our brands, digital transformation initiatives, e-commerce platforms and vertical quick response supply chain capacity, will continue to benefit the group,” it said.
TFG had 4,345 outlets across 31 countries at the end of the reporting period. Of these, 2,758 are in South Africa.
Loading ...