The South African parent company of Australia’s Retail Apparel Group, The Foschini Group (TFG), has recorded a margin improvement down under despite a drop in sales for the half fiscal year to September 30.
Total revenue for the company in Australia was 4.4 billion rand (~A$380 million) for the six months to September 30, with profit before tax in the region hitting 412.5 million rand - or just over A$35 million.
Revenue in Australia fell by 2.4 per cent compared to the same period last year, with TFG citing persistently high inflation and elevated interest rates, alongside consumers continuing to remain under pressure, impacting demand.
Despite the sales contraction, “management’s focus on inventory management ensured an improvement in gross margin (in AUD) of 120 basis points to 65.1 per cent,” TFG reported.
With the second half underway, TFG added that early signs are that the macro conditions in Australia are improving and that the company will remain “cautiously optimistic”.
Sales in Australia for the five weeks ended November 2, 2024, were 0.1 per cent lower.
TFG - which also manages brands in London alongside its core South Africa market - recorded a total sales fall of 2 per cent to 27.9 billion rand (~A$2.4 billion).
Australia made up 17.1 per cent of total sales, London at 13.1 per cent and South Africa at 69.8 per cent.
TFG cited difficult trading conditions in all territories for the 2 per cent total fall, “and impacted by the high clearance-driven sales base in TFG Africa in the comparative period.”
“However, the improvement from the 3.5 per cent decline reported in our 21-week guidance in September 2024 highlights the noticeable improvement in trading activity experienced in all territories since September 2024, and through to November 2024.
The group’s total online sales grew by 9.9 per cent and now contribute 10.7 per cent to overall sales.
“Gross margins were a key focus in all territories and increased by an aggregate 220 basis points to 49.5 per cent, leading to an increase in gross profit for the Group of 2.5 per cent to a record R12,8 billion.
“Trading expenses were also tightly controlled, increasing by 5.7 per cent despite stubbornly high inflation and the opening of 58 new stores during the period.”