By Nqobile Dludla
JOHANNESBURG (Reuters) -South Africa’s TFG said on Friday it will tighten costs and close underperforming stores after erratic monthly sales and soft winter demand led to a 21.3% half-year earnings fall.
As shoppers faced tough conditions across markets, TFG CEO Anthony Thunstrom highlighted monthly sales in Africa, which were flat in June and weaker in September due to payday-linked spending and softer-than forecast winter clothes demand.
Across TFG’s markets in Africa, Britain and Australia, inflation remains sticky despite easing from last year, while interest rate cuts have been slow to boost spending.
“Given the current environment, we will be very focused on all the things that we can control. These include driving further cost rationalization,” he told investors.
“When it’s tough in retail, you have to cut your cloth accordingly” Thunstrom said, adding that TFG will review inventory commitments and focus on closing underperforming stores through the second half of its financial year
TFG’s headline earnings per share fell to 292.6 cents in the six months ended September 30, while operating profit dropped 9.9% to 2.3 billion rand ($132.85 million).
Group gross margin contracted by 20 basis points to 49.3%, reflecting higher promotional intensity, while group revenue rose 12.2% to 31.4 billion rand.
In South Africa, international online retailers such as Shein continue to attract spending, despite its recent slowdown and smaller basket sizes, Thunstrom said.
TFG has embraced a fast-fashion approach in womenswear by localising production to respond quicker to trends. This has boosted sales by offering shoppers more on-trend styles and helped it compete with global rivals.
It is also increasing fast-fashion in menswear and starting to produce denim locally, which has the longest lead times because most is imported from Mauritius and Asia, Thunstrom said.
About 550,000 units are planned for this financial year ending March 2026.
“Much shorter lead times, better gross margin, easier to kind of move with trends,” he told Reuters.
($1 = 17.3125 rand)
(Reporting by Nqobile Dludla; Editing by Tomasz Janowski and Alexander Smith)
