Proudly sponsored by

TFG outshines its SA retail peers overseas

Looks to expand its presence in markets that have proved difficult for rivals Woolworths and Truworths.
The Foschini Group’s CFO Bongiwe Ntuli and CEO Anthony Thunström are upbeat about future prospects both locally and overseas. Picture: Moneyweb

The Foschini Group (TFG) is outperforming its JSE-listed rivals both locally and offshore in Australia and the UK, and is embarking on expansions in these two markets.

TFG peers Woolworths and Truworths saw write-downs of more than R4.7 billion and R1.7 billion respectively this year on retail acquisitions made in Australia and the UK. The apparent woes at the former’s Australian chain David Jones and the latter’s London-based business Office have seen the share prices of both SA groups slide. 

Read: Woolworths sees annual profit hit, writes down Australian business

Speaking during a media roundtable at the JSE on Thursday about the retail market and TFG’s plans, group CEO Anthony Thunström said its Australian and UK businesses were gearing up for expansion with new stores planned.

It is also eyeing expansion in New Zealand.

He said the company sees the most opportunity in Australia and New Zealand, and while the UK is what Thunström terms a soap opera, with Brexit having a real impact on consumer confidence, the group still see opportunities there.

Ladieswear fashion brand Phase Eight, which TFG bought in 2015. Picture: Supplied

Thunström says that despite the headwinds the UK is facing, TFG is doing well, with its ladieswear stores featuring among the top five store brands in the country. On Australia, he says the group is looking at “double-digit topline growth” and expansion of some of its South African brands there such as jewellery chain American Swiss.

Read: TFG reports annual sales up almost 20%

“Australia has not been in a recession since 1990 – it is almost the polar opposite to SA with unemployment also at records lows. Retail is not by any means easy there with the high costs around rentals and other operational costs, so there is little margin for error to get it right or wrong,” he adds.

TFG purchased Australia’s predominantly menswear-focused Retail Apparel Group (RAG) for just under R3 billion in 2017, which is now known as TFG Australia. Its foray into the UK began in 2015 with the acquisition of Phase Eight, with Whistles and Hobbs being purchased over the next two years. The UK deal values were not disclosed and the entities now fall under TFG London.

During the last five years, TFG has grown to include more than 4 000 stores in 32 countries on five continents.

“We operate stores in locations as diverse as Mexico City and Hong Kong,” says Thunström. “SA still represents the major share of our business and profits – we have around 2 500 stores here taking up around 750 000m2 of retail space.”

Read: Footgear buys Edgars Active as Edcon downscaling continues

Asked what TFG is doing differently in Australia and the UK compared to its SA peers, he said that with all offshore acquisitions “we find businesses with strong local management – and we don’t change management afterwards”, adding: “We also have incentives in place for management to stay on.”

‘Speciality’ niche

He says in both the UK and Australia TFG has bought into niche retailers that have a specific target market as opposed to mass market players. He calls it “specialty retail” and it’s also what the group is doing in SA to differentiate itself in the market, where it has some 20 store brands including the likes of Foschini, Markham, @home, SportScene, Fabiani and The Fix.

Independent retail analyst Syd Vianello says TFG has done well in Australia and to some extent in the UK as it has succeeded in retaining local executive teams. He says the group also seems to have targeted the right retailers for its offshore acquisitions.

“Both Australia and the UK are difficult retail markets to operate in, especially if you don’t have enough local insight. Often when companies are taken over, management leave after the big pay day or, if they stay, they may lose enthusiasm. You have got to have a level of incentives in place to keep them hungry to keep making money for the group,” he notes.

Read: TFG takes American Swiss jewellery brand to Australia

He says taking American Swiss to Australia is “an interesting move” but notes that TFG is known for experimenting on a small scale first with its store brands. “If it succeeds, it goes on to roll out on a bigger scale; if it doesn’t, it cuts its losses and tries something else.”

TFG chief financial officer Bongiwe Ntuli tells Moneyweb the group plans to open a new flagship 1 800m2 SportScene store at Sandton City next month which will have various experiential shopper offerings such as a fully functioning recording studio, tattoo parlour and sneaker cleaning service.

“We are really excited about this store, which will set a new benchmark in experiential retail in SA,” she says.

“Another of TFG’s fast-growing store brands is The Fix, which targets young women. We now have some 300 of these stores nationally. The group will continue to experiment within our 20 different store chains and experiential shopping experiences are a part of that.”




Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in and an Insider Gold subscriber to comment.


Will be interesting to hear how they do in Aus/NZ … I remember what happened to the House of Busby in their venture across the Indian Ocean.

SA retailers thought they were somehow skilled after the 90s and mid-2000s. No foreign competition. No China. An underserved majority. Uneducated and undiscerning consumers. An economy flush with new middle class credit and platinum money.

Turns out most SA retailers are just clueless and it was all just the circumstances. Hence the hidings overseas.

I think this is a slightly unfair comment. Having lived in Europe for two years now I can honestly say that SA retailers are light years ahead in terms of ranging, presentation and service compared to high street retailers in Europe. Note I am not talking about high fashion boutiques, just your middle of the road clothing stores for undiscerning shoppers like me

Yet they still get their hidings in a weak economy. Locally and overseas. Yet they still are losing to international competitors in SA. Strange.

End of comments.





Follow us:

Search Articles:
Click a Company: