Phase Eight performance surprises TFG

The Foschini Group’s (TFG’s) newly acquired UK fashion brand Phase Eight, which is not available in South Africa, has surpassed the group’s expectations in the first half-year financial results to 30 September, released on 12 November.

TFG, which had 2 390 stores in 31 countries globally by the end of the period, is the owner of @Home, Duesouth, Fabiani, Exact!, Donna Claire, to name a few. In the rest of Africa, the group opened 120 stores and closed 10 that were not profitable in the six months ended 30 September. In the rest of the world, the group has 81 stores.

TFG CEO Doug Murray said in an interview with finweek that under the tough economic conditions, producing a growth in headline earnings per share (HEPS) of 16.6% is a good result.

TFG reports that, excluding Phase Eight, the group turnover increased by 33.6% to R9.8bn in the period. The group said it had strong cash sales growth of 15.8% (67.4%, when including Phase Eight) that now represent 46.2% of the group turnover (which adds up to 55.4% when including Phase Eight).

Murray said: “When we bought the business we didn’t expect Phase Eight to be accretive to our earnings this year because when we buy a business like that, we have the debt overseas and we knew what we were budgeting for this year. What actually happened is that Phase Eight results were slightly ahead of expectations for us in British pounds. And there are earnings accreted.”

Although Phase Eight is not a large part of the TFG business, Murray said it is a part of the group’s long-term strategy.

“We suspect they will be slightly accretive for the full-year results and we are very happy with the way the integration is going with the business and on plan,” he commented.

Credit sales for the group went up 6.8% from 2.5% in the corresponding period.

Murray said that with credit sales at 6.8%, this is positive, considering that the company had not changed their credit granting criteria and there had not been growth in new accounts, meaning the growth is coming from existing accounts.

Clothing proved to be the best performer for the group in the first half of the year, with combined turnover growth being at 12.5% excluding Phase Eight. The 13.1% growth in homeware and furniture, the 10.2% growth in cosmetics, and 6.3% in jewellery followed this.

The group is well on its way in adding an e-commerce offering to some of its brands. Last year it went online with @Home and in June, the group added Totalsports, Sportscene, and Duesouth to its online stores.

The group is still forging ahead with its Africa expansion strategy – it plans to open about 330 stores across the continent by 2021.   From