{"id":840613,"date":"2025-10-22T13:00:00","date_gmt":"2025-10-22T11:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=840613"},"modified":"2025-10-22T13:03:01","modified_gmt":"2025-10-22T11:03:01","slug":"top-south-african-retailer-goes-from-hero-to-zero-in-75-days","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/840613\/top-south-african-retailer-goes-from-hero-to-zero-in-75-days\/","title":{"rendered":"Top South African retailer goes from hero to zero in 75 days"},"content":{"rendered":"\n

TFG (The Foschini Group) promised the market an exceptional performance during its 2025 Capital Markets Day. 75 days later, it produced results far below expectations.<\/p>\n\n\n\n

During TFG\u2019s Capital Markets Day on 6 and 7 August 2025, chief executive Anthony Thunstr\u00f6m and his management team painted a rosy picture.<\/p>\n\n\n\n

Thunstr\u00f6m told investors that TFG has done much of the heavy lifting and that their strategy was working.<\/p>\n\n\n\n

He told investors that TFG will be outperforming the market through consistent share gains and category leadership.<\/p>\n\n\n\n

TFG CFO Ralph Buddle told investors they were driving sustainable growth through organic expansion, strategic acquisitions, and diversification.<\/p>\n\n\n\n

He said they focused on store optimisation and were on track to achieve a 5-year compound annual growth rate (CAGR) of 12.5%.<\/p>\n\n\n\n

He added that they drove margin expansion through initiatives like optimising inventory management and expanding in-house production capabilities.<\/p>\n\n\n\n

There was also continued focus on cost control, which includes optimising store space utilisation and efficient resource allocation.<\/p>\n\n\n\n

\u201cThere is a rigorous focus on managing operational expenditure, overheads, and supply chain costs,\u201d Buddle said.<\/p>\n\n\n\n

TFG has even started to use AI to reduce costs across various business functions by optimising and improving decision-making and process automation.<\/p>\n\n\n\n

The TFG CEO added that their Africa Financial Services division is focused on enhancing Return on Equity (ROE) by leveraging origination of Value-Added Services (VAS).<\/p>\n\n\n\n

He further said the management team ensures the strategic distribution of resources to maximise returns for investors.<\/p>\n\n\n\n

A rude awakening for investors after TFG\u2019s trading update<\/h2>\n\n\n\n
\"\"<\/a>
TFG Management Team<\/figcaption><\/figure>\n\n\n\n

On Tuesday, 21 October 2025, TFG published a trading update for the six months ended 30 September 2025.<\/p>\n\n\n\n

Over the reporting period, group sales grew by 12.7% to R29.2 billion. This included revenue from the recently acquired UK retailer White Stuff.<\/p>\n\n\n\n

However, when the impact of White Stuff is removed, sales only rose by a more subdued 3.5% over the last six months.<\/p>\n\n\n\n

TFG further informed the market that its basic earnings per share will decrease by between 20% and 25%.<\/p>\n\n\n\n

TFG explained that its acquisition of White Stuff resulted in finance costs doubling to \u00a34 million (around R92.74 million).<\/p>\n\n\n\n

TFG\u2019s Australia segment also recorded a tough half-year, with sales down 0.5%. The company said this was due to subdued discretionary spending.<\/p>\n\n\n\n

In addition, due to expenses growing ahead of sales, driven by costs from new stores and continued inflationary pressure, this segment\u2019s EBIT declined by 18.4%.<\/p>\n\n\n\n

The only true positive in the results was online sales, powered by Bash, which performed well over the period.<\/p>\n\n\n\n

Group online sales grew by 55.3% in the six-month period, including White Stuff, and now contribute 14.7% to total retail sales. TFG Africa online sales grew by 40.2%.<\/p>\n\n\n\n

Bash, under the leadership of e-commerce veterans Claude Hanan and Luke Jedeikin, brought all TFG brands together in a single platform.<\/p>\n\n\n\n

It is widely seen as a game-changer for the company, reaching over eight million downloads within three years of its launch.<\/p>\n\n\n\n

The company attributed much of its success to forward thinking and spotting the opportunity to launch an e-commerce platform at the right time.<\/p>\n\n\n\n

The poorer-than-expected results caused investors to dump the stock, and the TFG share price plummeted by 16.64% on Tuesday.<\/p>\n\n\n\n

It wiped out R6.7 billion from the TFG market cap in a day, which showed the impact of the disappointing trading statement.<\/p>\n\n\n\n

Analysts explain the TFG share price plummeted<\/h2>\n\n\n\n
\"\"<\/a>
Shane Watkins, Chief Investment Officer at All Weather Capital<\/figcaption><\/figure>\n\n\n\n

Shane Watkins, Chief Investment Officer at All Weather Capital, explained that the reason for the sharp share price decline was not a poor trading statement.<\/p>\n\n\n\n

Instead, it was “unexpectedly bad, considering what TFG, and its CEO, Anthony Thunstr\u00f6m, told the market three months ago”.<\/p>\n\n\n\n

The TFG management team recently engaged with large groups of institutional investors at their capital markets day and at a global bank\u2019s conference.<\/p>\n\n\n\n

\u201cDuring these engagements, the TFG management team did not communicate the extent of the bad results they announced in their trading statement,\u201d he said.<\/p>\n\n\n\n

This means the market was surprised by the TFG trading update for the six months ending 30 September 2025.<\/p>\n\n\n\n

This caused many investors to dump the stock, which caused the TFG\u2019s share price to decline by 16.64% on Tuesday, 21 October 2025.<\/p>\n\n\n\n

Watkins explained that TFG has grown largely through acquisitions over the last decade. However, these acquisitions did not strengthen the bottom line.<\/p>\n\n\n\n

The TFG management team has, through the acquisitions, grown sales growth but not earnings growth.<\/p>\n\n\n\n

\u201cDespite growing revenue enormously, there has not been earnings growth,\u201d Watkins told Business Day TV\u2019s Stock Watch.<\/p>\n\n\n\n

The result is that the TFG share price is the same as it was ten years ago, making it a poor investment.<\/p>\n\n\n\n

The latest results, with fairly strong revenue growth but a big decline in earnings, continued the trend over the last ten years.<\/p>\n\n\n\n

\u201cThis trend alarmed investors and made people question whether TFG\u2019s acquisitive strategy is working,\u201d he said.<\/p>\n\n\n\n

Ricus Reeders from PSG Hole in One Ruimsig agreed, saying revenue growth and a decline in earnings show that margins are under pressure.<\/p>\n\n\n\n

\u201cThis means that TFG\u2019s acquisitions are not really doing the job they are supposed to be doing,\u201d he said.<\/p>\n\n\n\n

He added that TFG\u2019s promise of earnings growth is taking longer than promised and is not fulfilling market expectations.<\/p>\n\n\n\n

\n\n\n\n

TFG Financial Performance<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n
\n\n\n\n

TFG’s Share Price in 2025<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n
\n","protected":false},"excerpt":{"rendered":"

The Foschini Group promised the market an exceptional performance during its 2025 Capital Markets Day. 75 days later, it produced results far below expectations.<\/p>\n","protected":false},"author":10,"featured_media":840616,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[19503,23879,5450,5451,4671,23880,23881,21735,9214,23878,20827],"class_list":["post-840613","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-all-weather-capital","tag-anthony-thunstrom","tag-claude-hanan","tag-luke-jedeikin","tag-psg","tag-ralph-buddle","tag-ricus-reeders","tag-shane-watkins","tag-tfg","tag-tfg-the-foschini-group","tag-white-stuff"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/840613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=840613"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/840613\/revisions"}],"predecessor-version":[{"id":840661,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/840613\/revisions\/840661"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/840616"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=840613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=840613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=840613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}