Sun, 17 Nov 2019

The Foschini Group [JSE: TFG] - which consists of Foschini, @home, Markham, Totalsports, Sterns and other brands - reported a 6.3% increase in revenue to R18.6bn, with headline earnings per share up 3% for the six months to end-September.

The company generated free cash flow of more than R1.1bn, equal to 91% of net profit after tax. Cash sales now contribute almost 74% of group turnover.

Clothing turnover grew 6.8%, while homeware and furniture (+7.9%) and jewellery (+4.2%) also see growth - while sales of cosmetics fell by 1.2%. Online turnover grew by 4% across the group and now contributes 8.8% to turnover.

The company pushed up its interim dividend by 15% to 335c cents per share.

Turnover at its TFG London unit, which owns premium clothing brands in the UK, was flat "in a particularly tough environment" amid Brexit-related uncertainty. Its Australian business saw turnover growth of 11% .

"The general retail outlook in the UK and Australia remains relatively subdued. However, the retail outlook for South Africa is particularly challenging given the close to zero growth environment, chronically high structural unemployment and the continuing speculation of a possible credit downgrade and what that may imply for the consumer."

The second half of the group's financial year is heavily dependent on Black Friday, Cyber Monday and Christmas trade, which will largely determine performance for the full year, TFG said.

"In South Africa, trading conditions have continued to tighten over recent months and, coming off a high base in the previous period, the group is cautious in respect of its expectations for the remainder of the financial year."

Foschini's share price was down 1.8% by late afternoon.

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