Retail clothing group The Foschini Group (TFG) has announced a ramp-up in capital expenditure (capex) spending in the coming financial year after posting record turnover of R43.4-billion, gross profit of R21-billion and headline earnings of R3.3-billion for its financial year ended March 31, as the group steps up its pursuit of growth opportunities.

TFG says it will build ten new manufacturing business units in the coming year, as well as commit more than R600-million towards opening in excess of 350 new stores.

The investment in increased manufacturing capacity will more than double employment opportunities in the group’s own factories and strategic non-owned cut-make-trim (CMTs) factories from 5 200 in the financial year under review to 11 200 by full-year 2026.

The R2.1-billion capex commitment for full-year 2023 continues the group’s strategic investments to further strengthen its differentiated business model and mitigate disruptions to global supply chains.

MARKET-SHARE GAINS

The group delivered considerable market share gains across all territories over the past financial year, achieving 27% growth in mens and ladieswear in South Africa against average growth for the segment of 5.9%.

The group says its record performance was achieved despite a challenging trading environment, continued periods of lockdown, the civil unrest in KwaZulu-Natal and global supply chain disruptions, with retail turnover growth surpassing expectations at R43.4-billion.

Gross margin for the group increased to 48.5% as strong demand for TFG’s products resulted in a higher proportion of full-price sales and fewer markdowns.

This was enabled by a number of factors, including quick response local manufacturing which makes up an increasing proportion of the 72% of locally sourced apparel.

“We have opened 274 new stores in South Africa, completed 96 relocations and enlargements, rebuilt or restored 176 looted stores, as well as opened 41 new stores in Australia and eight new stores in London.

“That’s 2.4 stores a day over the past year. Additionally, we’re making significant investments in expanding our manufacturing capacity,” says TFG CEO Anthony Thunström.

The group achieved double-digit growth in e-commerce turnover across all territories, recording an 18% increase in online sales in Africa, 13.8% in the UK and 26.9% in Australia, extending the trend towards online shopping experienced during lockdown.

“TFG has made solid progress in our goal to create the most remarkable omni-channel experience for our customers, with the acquisitions of leading app developer Flat Circle and last-mile delivery service Quench, as we pave the way for the upcoming launch of our new integrated omni-channel platform that leverages group scale to bring all TFG brands together, along with third-party vendors,” indicates Thunström.

“Our commitment to putting our customers first is reflected in TFG’s dominance in social media audiences, 22% growth in our loyalty base, continuously improving customer satisfaction scores and 20% decline in call-centre contacts despite increased online turnover.

“Our investment in TFG Labs is producing a step-change in critical performance areas, with a 19% reduction in cost per order, 50% improvement in last-mile on-time deliveries and a 10% drop in average order turnaround times,” he adds.

Thunström avers that superior growth achieved in all the group’s operating territories, and solid progress on key strategic objectives, leaves TFG very well positioned for further organic and inorganic growth, supported by a strong group balance sheet.

“Just as importantly, the group has delivered remarkable progress in our social performance. In a country facing devastating levels of unemployment, we have added 7 176 jobs and workplace opportunities, shifted R2-billion more business to black-owned suppliers, set environmental commitments for cotton, wood and washcare labels and signed up to the Better Cotton Initiative to source cotton sustainably.

“TFG has also become the only major retailer to achieve Level 3 broad-based black economic empowerment , up from Level 6 in the previous year,” Thunström notes.