Mr Price and TFG report strong festive season growth

Supported by consumers returning to stores and the promotional season.
Image: Reuters/Siphiwe Sibeko

JSE-listed companies Mr Price Group and the Foschini Group (TFG) on Friday reported strong third quarter growth that was boosted by the return of consumers to the traditional retail setting and the increase in sales during the promotional November period.

The positive trading updates saw both stocks firm around 5% on Friday.

Fashion retailer TFG says group retail turnover grew 17.3% for the period, supported by a strong retail performance across all of its operating regions.

TFG Africa saw turnover growth of 17.3% in quarter three, while TFG London and TFG Australia reported retail turnover growth of 25.5% and 16.9% respectively.

On the other hand, clothing and homeware retailer Mr Price reported a 19.2% growth in retail sales and other income to R9.3 billion for the 13 weeks ended January 1, 2022.

The group attributed this performance – to which newly-acquired businesses Power Fashion and Yuppiechef contributed significantly – to the “strong execution of its  diversified and differentiated fashion-value business model.”

Promotional season

TFG said the promotional season in November and December saw TFG Africa’s retail turnover increase by 5.5% and 11.2 % respectively.

The growth according to the retailer was boosted by a robust Black Friday – which raked in R422 million compared with R341 million the previous year – and a generous festive season which saw it delivering R380 million more in retail turnover the week before Christmas than during the previous comparable period.

“Festive period retail turnover exceeded expectations, with strong customer demand for the group’s products,” TFG said.

Unlike its upmarket competitor, TFG, Mr Price took the decision to hold back on November and December promotions, deciding to sell more items at full price. This resulted in a temporary loss in market share in October and November.

Despite this the group saw retail sales grow by 17.1% – with its apparel segment leading the growth and increasing third quarter sales by 19% more than the previous comparable reporting period.

Mr Price said it’s confident that its decision to hold back on festive season promotions fell in line with its strategy to focus on “continuing retail sales growth momentum, maintaining targeted gross profit margin and managing stock levels”.

TFG out of Africa performance

Relaxed Covid-19 restrictions in Australia saw TFG’s business in the country pick up and edge towards a pre-lockdown trade rebound.

Greater freedom of movement in the country allowed the group to increase retail activity and achieve a strong retail turnover growth of 16.9%, which was boosted by online retail turnover growth of 43.1% compared with the previous comparable period.

TFG’s UK business continued to improve its performance in the third quarter, as customer demand for key categories started to recover.

TFG London saw in-store retail turnover increase by 53.7% in the third quarter, while online retail turnover from TFG sites increased by 5.5%.

Shipping delays

Global supply chain issues have been the cause of headaches for many retailers as pressured supply lines and delays at international shipping ports have driven up costs.

Mr Price said it’s pleased that global shipping container shortages – which materially impacted global supply chains in 2021 – have improved. This it said will help lower the risk of experiencing inventory shortages and delays.

“The short-term improvements in the trading environment are encouraging. However, the group anticipates further uncertainty for the foreseeable future,” Mr Price said.

The group added that it anticipates rising input costs and exchange rates to result in higher merchandise inflation in the next financial year. So Mr Price plans to focus on strong merchandise execution to ensure growth.

In November 2021, the group said it was looking to source 20 million more units of clothing and homeware locally, in response to constrained global supply chains. At the time the retailer sourced about 40% of its products from China.

Read:
Mr Price to source more products locally
Supply  crisis spurs SA retailers to end Asia reliance

TFG Africa – with its largely localised business model – was mostly shielded from the effects of the world’s supply chain problems which seemed to only affect its cosmetics and cellphone categories.

“All merchandise categories grew retail turnover compared to the same quarter in the previous financial year, except for the most discretionary category, cosmetics, and cellphones, largely due to international supply chain disruptions,” TFG said.

Read: TFG opens new Joburg clothing factory for the hearing impaired

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