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Send  Share  RSS  Twitter  28 May 2009

RETAILING: Foschini Reports Solid Results

 



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The Cape Town-based Foschini Group produced solid results, given the tough economic times, with the second half of the past year in particular delivering good growth with turnover for the period up 7,8% and headline earnings up 6,1%.

Turnover for the full year ended 31 March 2009 was up 5,5% to R8,1-billion with diluted headline earnings per share up 2,8% to 553c a share for the year. A final dividend of 170c a share (or 288c for the year) was declared.

In line with the group’s strategy of investing for the longer term, the group opened 154 new stores during the year. Further plans are afoot to open another 120 stores in the current year in certain of the group’s formats that are under-represented, which is expected to stand the group in good stead when the upward trend in the retail cycle returns.

Doug Murray, Foschini Group CEO, says “Despite the downturn in the economy the group’s retail debtors’ book and balance sheet remain extremely strong and all our trading divisions are in good shape and well placed to maximize any upturn in the economy”.

In the context of the economic climate which prevailed during the year, we are pleased with this result, particularly the second half.  Retail turnover for the first eight weeks of the new financial year has been encouraging as the improving trend demonstrated in the second half of last year has continued.  Despite the recent interest rate cuts and inflation’s downward trend, we do not expect much improvement in the trading cycle until the second half of this year.”

He said the group’s largest trading division, the Foschini division, performed much better in the second half of the year.  The repositioning and turnaround of the Foschini brand is now well under way and we expect the performance of this business to continue improving.

Because of the group’s conservative approach to new account openings, the performance of the debtors’ book continues to be satisfactory with net bad debts as a percentage of debtors’ book increasing marginally to 8,7% - one of the lowest bad debt percentages in the industry.

The group’s supply chain initiative which commenced just over a year ago will result over a period of time in reduced product lead-times, improved stock turns and stronger supplier relationships, ensuring the group’s ability to be first to market with key products.

All the group’s divisions performed satisfactorily in the second half of the year – up 7,8% following a challenging first half in which turnover growth was 2,9%.

@home, Markham and the sports division all notched up double digit growth, with the sports division adding 12,6% to its turnover of R1,29-billion, Markham adding 10,1% to R1,3-billion and @home up 10,9% off a smaller base to R508-million.

The future continues to look rosy for the sports division, made up of Totalsports, Sportscene, and DueSouth, which is actively focused on leveraging Soccer World Cup 2010, where the division is the partner of choice for several of the major brands.

The jewellery division, comprising 350 American Swiss, Sterns & Matrix stores, performed above expectation in the current climate with turnover growth of 3,2%. It remains the dominant player in the mass middle-market jewellery sector and continued to grow its market share this year.

RCS Group which is 55% owned by the Foschini Group and the remainder by the Standard Bank of South Africa Limited provides a range of broader financial services to customers of the group, as well as to customers of retailers outside the group. The RCS Group made a profit of R203m for the full year, with a better performance in the second half of the year resulting in profitability for that half growing by 8%.  The quality of new business written in the second half has improved and better results are expected next year.  Whilst the RCS Group has significant growth potential for the future, this growth is dependent upon the availability of funding and this is currently being addressed.


 
 
 
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