SUREN NAIDOO: JSE-listed style, jewelry, homeware and furnishings retail big, The Foschini Group, or TFG as it’s identified, is on a giant growth drive with plans to open some 350 shops for the present monetary yr. It can also be investing closely in native clothes manufacturing as an more and more vertically built-in retail group.
TFG CEO Anthony Thunström, and CFO Bongiwe Ntuli had been in Johannesburg as we speak and had a media spherical desk to share extra on these and different plans. Joining us now’s Anthony Thunström to provide us additional perception. Welcome to the present, Anthony.
ANTHONY THUNSTRÖM: Hi Suren, nice to be with you and all of your listeners.
SUREN NAIDOO: Before we talk about The Foschini Group’s considerably bullish growth plans, Anthony, inform us how had been the Black Friday sales – did TFG beat pre-Covid sales ranges?
ANTHONY THUNSTRÖM: We’ll be placing out an in depth buying and selling replace throughout January, so I in all probability can’t share particular numbers. But I believe it’s secure to say we deliberate very rigorously for Black Friday throughout all of our manufacturers, each right here and internationally, and it was I believe a really pleasing consequence, each on the Black Friday day itself, however equally during the last couple of years, Black Friday has morphed. It’s very a lot at the very least a ‘Black Friday week’. For some retailers it’s stretching extra and extra over an extended interval of November. But general, we’re very happy and sit up for with the ability to share these outcomes with the market in the end.
SUREN NAIDOO: Okay. Since you may’t discuss financials, naturally, simply when it comes to the group you’re fairly a various group with all these totally different manufacturers. Were there particular sectors that gave the impression to be performing higher, clothes maybe, with the world nearly opened up now?
ANTHONY THUNSTRÖM: Absolutely. Clothing remains to be the most important a part of our group. It’s a comparatively high-margin contributor as effectively, so it’s crucial to our general outcomes, and clothes traded very effectively over the interval. We primarily in our clothes division have a bunch of what we describe as very high-brand fairness manufacturers. Those are manufacturers that we’ve spent years advertising and marketing, increase the fairness utilizing influencers, social media, numerous different advertising and marketing instruments, actually to ensure that our manufacturers are super-desirable.
I believe one of many patterns that we’ve seen rising during the last couple of years, and definitely once more this yr, notably as a result of powerful financial occasions individuals are actually very eager to get any sort of Black Friday particular gives on manufacturers that they actually love, manufacturers with excessive model fairness, as I stated. So clothes was sturdy.
I believe the opposite sector that was notably pleasing was homeware. We’ve had fairly a fast growth in our homeware enterprise. We not too long ago acquired the Tapestry secure of manufacturers. All of that traded very effectively during the last couple of months, however notably in November and on Black Friday.
We relaunched Jet Home over the course of the final yr as a derivative of standalone shops publish the Jet acquisition. They traded effectively as effectively. So homeware and furnishings as a class did effectively. There was lots of demand for know-how. We promote lots of tabular telephones, laptops and notepads throughout the group. There is lots of demand for that, lots of demand for magnificence and lots of demand for jewelry.
So, sort of stepping again, there was just about sturdy demand throughout all of our totally different segments.
SUREN NAIDOO: The group has persistently been posting double-digit income growth, as you talked about earlier this morning. Perhaps, barring the Covid interval, is that this the rationale TFG is planning to open so many shops and is so bullish about growth?
ANTHONY THUNSTRÖM: Maybe to unpack that I believe we do have a big portfolio of manufacturers at any cut-off date. Each of these manufacturers is at a distinct stage in its life cycle. If a model has in any method misplaced relevance with its client base, we [re]place it and give it one other entire spurt of growth, one other life. At the identical time we at all times attempt to have a number of what we time period ‘incubator brands’ that we’re ranging from scratch or ……5:10 trying to work out the system to scale them. It’s one thing that’s very a lot in our DNA, one thing we do persistently.
Again, if you happen to have a look at the 350-odd shops that we plan on opening this yr, lots of these are going to return from manufacturers that we had been incubating two, three years in the past and which are actually coming to fruition. So t’s one thing we preserve investing in, preserve focusing on. And so long as you get that pipeline proper it’s best to have manufacturers that may proceed to scale.
And then I believe the opposite space that’s actually proven lots of pleasing growth is how we’ve been capable of scale manufacturers into additional and additional elements of South Africa. Most huge listed retailers began concentrated within the huge cities, virtually by definition, over time. And I believe, notably on the again of the Jet acquisition that had a way more diversified retailer portfolio throughout the nation, we’ve actually seen that we will commerce with lots of our manufacturers very efficiently in locations that we hadn’t really traded earlier than. So I believe geographically [it’s] a giant alternative and, going again to the sooner level with the portfolio of manufacturers, lots of manufacturers are nonetheless considerably underrepresented throughout the nation.
SUREN NAIDOO: Taking that additional, the growth for The Foschini Group – you talked about Tapestry earlier – TFG concluded the greater than R2 billion acquisition of Tapestry Home Brands this yr. How does this acquisition match into TFG’s broader growth plans, since you talked about among the manufacturers like Volpes having 16 ……60?] shops, I consider, and that may very well be as much as over 100 by TFG. There had been a number of manufacturers in that acquisition.
ANTHONY THUNSTRÖM: It’s a very good query and I assume it hyperlinks partly again to your earlier query. We actually are about discovering, creating, [and] in some circumstances buying high-brand fairness manufacturers. If you have a look at the Tapestry Group, if you happen to suppose mattresses and bedding in South Africa, Dial-a-Bed is a completely iconic family title, very a lot a market chief. ……7:32 Linen additionally when it comes to standalone linen shops is head and shoulders above what else is available in the market.
The actuality, although, is all of those companies at a cut-off date have some constraints when it comes to their very own potential to scale additional and to achieve their most potential. We’ve acquired an distinctive property staff that’s capable of actually analyse the information of our current retailer footprint.
We are heading in direction of 3 500 shops throughout South Africa, so we’ve acquired a point of protection and information on just about a lot of the purchasing nodes throughout the nation, and we will use that to begin to inform our choices when it comes to the place the rollout alternative sits – location, technique, measurement of shops, what leases we needs to be paying.
Again, going again to the Tapestry Group, that acquisition, as you stated, got here by firstly of August. We have already opened 17 new Tapestry shops and within the two-odd months that we’ve owned them Tapestry, because it was pre-The Foschini Group, in all probability would’ve opened, I don’t know, three or 4 shops in a yr. So to have executed 17 in two months I believe exhibits the runway. And trying forward I believe [we’ve] very effectively recognized 100-plus areas. But we nonetheless wish to take Tapestry to actually……8:57 and that’s simply the primary reduce. There’ll be extra to comply with.
SUREN NAIDOO: Anthony, you hinted at additional acquisitions probably from an acquisitive growth perspective for TFG throughout the briefing earlier as we speak, however you could be eyeing the UK considerably. Is TFG nonetheless cash-flush for acquisition alternatives? I do know that the group had a capital elevate of some R4 billion a yr or two throughout Covid.
ANTHONY THUNSTRÖM: Yes, completely. Look, we do have very sturdy stability sheets, and that’s one thing that we’ve executed lots of work to make sure is in place. We have, once more, a really strict set of standards round potential acquisitions, however it’s once more very a lot a part of our growth DNA. We get approached on a really frequent foundation with alternatives – in lots of circumstances virtually weekly. We filter by these standards just about religiously. We in all probability get to a nondisclosure settlement stage with one thing like one out of a hundred-odd alternatives that we come throughout. And we proceed to sort of discover issues that will make sense in the event that they plugged into The Foschini Group platform.
SUREN NAIDOO: Anthony, we must go away it there. Thanks a lot on your time. That was Anthony Thunström of Cape Town-based TFG.
