South African fashion retailer The Foschini Group (TFG) reported a sharp 21.3% decline in half-year profit, reflecting challenging trading conditions both domestically and internationally. The company cited sluggish consumer spending in South Africa, rising operational costs, and mixed performance across its overseas markets in the UK and Australia.
For the six months ending September 30, headline earnings per share fell to 292.6 cents, while operating profit dropped nearly 10% to 2.3 billion rand (approximately US$133 million). Despite a revenue increase of 12.2% to 31.4 billion rand, much of this growth came from acquisitions such as UK retailer White Stuff and a strong surge in online sales. TFG’s e-commerce division grew 55.3% during the period, now contributing 14.7% of total revenue, highlighting the increasing importance of digital channels in its business model.
The company noted that weak local demand, particularly in June and September, negatively impacted margins. Gross profit margin contracted slightly to 49.3% due to higher promotional activity aimed at stimulating sales, coupled with cost pressures.
Despite the profit decline, TFG declared an interim dividend of 130 cents per share, demonstrating confidence in its liquidity and ability to reward shareholders. Analysts note that while acquisitions and online growth are positive, sustaining profitability amid soft domestic demand will be a key challenge for the company going forward.
TFG operates a portfolio of fashion and lifestyle brands, and the results underscore the difficulties retailers face in balancing growth in international markets with pressures at home. The company is seeking to leverage e-commerce and international acquisitions to offset local challenges and maintain long-term competitiveness.
Industry observers suggest that TFG’s experience mirrors broader trends in the retail sector, where consumer behavior is shifting toward online shopping and discretionary spending is under pressure in several markets. For investors, the company’s ability to integrate new acquisitions, manage costs, and grow online revenue will be critical to future earnings stability.