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Cape Town - TFG (The Foschini Group) announced on Thursday that it has produced strong sales growth of 33.6% for the six months ending September 2015.
This was boosted by the acquisition of UK-headquartered international womenswear brand Phase Eight, strong cash sales growth of 15.8% (including Phase Eight, 67.4%) and improved credit sales growth of 6.8%. Excluding the impact of Phase Eight, the group achieved retail sales growth of 10.8%.
TFG now trades in 31 countries globally.
Headline earnings from continuing operations increased by 16.6% to 470.2 cents a share - compared to 403.3c in the previous period. An interim distribution of 306.0 cents a share has been declared, a growth of 16.3% from the previous corresponding period.
TFG CEO Doug Murray said the group has a diverse product offering across a broad range of merchandise categories, appealing to a wide range of customers from value to upper LSMs.
“Our current good cash sales growth is expected to continue reflecting the ongoing desirability of our merchandise,” said Murray.
Credit turnover growth was encouraging at 6.8%, up from 2.5% in the corresponding period. The stronger growth rate followed improvements both in customers’ buying position and also in average sales value.
The retail debtors’ book of R6.3bn has increased by 2.2%. The growth in net bad debt reduced to 4.4% - it was 9.9% in the corresponding period last year. Net bad debt as a percentage of the closing debtors’ book increased to 14.0% - it was 13.6% at the end of previous year.
TFG said it intends to optimise its balance sheet following the Phase Eight acquisition, by bringing its recourse debt-equity ratio from the current 56.2% closer to 40% in the medium term. Accordingly, a further scrip distribution with a cash dividend alternative will be offered to shareholders in the short term.
The intention is to cumulatively increase equity by approximately R1bn over time, positioning the group for future growth opportunities.
Murray said that although turnover for the second half of the year would be heavily dependent on festive season trading, sales for the first six weeks were at stronger levels growing by 34.6%.
Foschini’s share price closed up 2.65% at R147 on Thursday.
