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Foschini outpaces consensus

Johannesburg - South Africa's third-largest apparel retailer Foschini Group [JSE:FOS] beat forecasts with a slight 6% rise in full-year profit on Thursday as debt-laden shoppers chased after its budget-friendly but low-margin merchandise.

Foschini, which also sells jewellery and furniture, said diluted headline earnings per share totalled 903 cents in the year to end-March, a touch above the 887c estimate in a Reuters poll of 13 analysts.

Headline EPS is South Africa's most widely watched profit gauge that strips out some one-off and non-trading items.

Sales rose 9.8% to R14.2bn, with cash sales growing by 16% while purchases on credit inched up 5.7%.

Foschini has tightened its criteria for granting store credit cards in response to higher fuel prices, unemployment and debt write-offs that have hit both retailers and banks in Africa's second-largest economy.

The company, which competes with Mr Price [JSE:MPC] and Truworths [JSE:TRU], raised the money set aside to cover customer defaults by 20% to R720m.

Mr Price, a largely cash-based retailer whose market value has recently shot past both Foschini and Truworths, posted double-digit rises in both sales and profit earlier this week, as consumers flocked to its no-frills stores.
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