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 despite challenging macroeconomic conditions and increased competition from global online retailers.

• Delivered positive operating leverage, improved margins, and 9.9% EBIT growth, with headline EPS of ZAR 9.707 and a resilient strategy focused on growth and efficiency.

• Increased final dividend by 33% and full-year dividend by 9.4%; net debt reduced by over 30% to ZAR 4.9 billion.

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

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

Financial highlights

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

• Headline earnings per share increased 0.2% to 970.7c; total dividend up 9.4% to 350c per share, with a final dividend up 33%.

• Gross margin held steady at 47.9%; operating margin improved to 10.6% from 10.5% in FY2023.

• Net debt to EBITDA improved to 0.76x from 1.2x; inventories down 11.6%.

• TFG Africa delivered record revenue (ZAR 43.1bn), gross profit, and EBIT (ZAR 4.2bn).

Outlook and guidance

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

• Margin pressure anticipated in the UK and Australia, but easing is expected in H2 as interest rates are forecast to drop.

• Focus remains on extracting value from recent investments, optimizing store network, and expanding omnichannel capabilities.

• Medium-term operating margin target for TFG Africa set at 14%.

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