Slide 1: TFG Results Presentation
TFG RESULTS PRESENTATION For the half-year ended 30 September 2022 We inspire our customers to live their best lives
Slide 2: Agenda
Agenda 01 Overview and Highlights 02 Financial Review 03 Segmental Performance 04 Strategy and Outlook
Slide 3: Overview and Highlights
01 OVERVIEW AND HIGHLIGHTS Anthony Thunström Group CEO
Slide 4: Operating context
Operating context TFG London • Inflation and cost of living crisis • Upward wage pressure • Subdued GDP growth outlook • Global supply chain challenges • Transport and other strikes • Sustained consumer spending TFG Australia • Low unemployment • Low consumer confidence • Inflation peaking at 6.1% •
Slide 5: Group highlights
Group highlights Performance and Progress Strong group results Exceptional segmental performance • Group Turnover up 23,5% (LFL 11,4%) Turnover Gross Profit Group Margin growth • Africa up 16,9% • Australia up 48,7% • London up 21,2% From +23.5% +24.8% 48.8% to And significant transformational inves
Slide 6: Group turnover growth
Group turnover growth Continued market share gains recorded TFG Africa – outperformance in key categories Growth in turnover - H1 YoY change in retail sales YoY change in retail sales FY23 TFG Apparel TFG Homeware & Furniture 60 35% 25% Acquisition of Tapestry 30% 20% 25% 50 15% 20% 15% 10% 40 10% 5
Slide 7: Delivering on our strategy
Delivering on our strategy Clear and focused investment in key transformative initiatives B O L T S Build out Optimise Leverage Transform Sustain diversified, high brand our sourcing mix and our assets: customer into a true ourselves and our equity businesses, both supply chain efficiency data, stor
Slide 8: Tapestry Home Brands
BO L T S Tapestry Home Brands Strategic acquisition to transform our homeware and furniture business S I N C E A C Q U I S I T I O N : • Successfully integrated the @HOME UPPER businesses into TFG CORICRAFT GRANNY GOOSE DIAL-A-BED • 17 new stores by November R A T I O N A L E : VOLPES • Introduced T
Slide 9: Tapestry in TFG
BO L T S Tapestry in TFG From strength to supercharged And the best is yet to come… P L A N N E D O R G A N I C G R O W T H G R O U P M U S C L E A N N U A L I S E D T U R N O V E R • Planning c. 100 stores over • Leveraging TFG’s 29m Rewards R2,7bn the next 3 years customer base • Leveraging Group
Slide 10: Localised Quick Response Manufacturing
B O L T S Localised Quick Response Manufacturing Doubling down on our competitive advantage Demonstrated benefits – Strategic hubs under development and current Own manufacturing versus other suppliers capabilities per hub 1 year rolling to end September 2022 (TFG Africa) Gauteng Prestige Johannesbu
Slide 11: Leveraging our Customer Rewards base
B O L T S Leveraging our Customer Rewards 1 in 2 South Africans are TFG Rewards Members Rewards customer base Rewards v Non-rewards customers FY18 to FY22 Oct 2021 – Sept 2022 +925k Average 35 New members YTD +60% millions sales value 30 25 Average basket 20 15 +15% size - units 10 Gross margin 5 0
Slide 12: Transform into a true omnichannel retailer and platform play
B O L T S Transform into a true omnichannel retailer and platform play Progressive improvement in our e-commerce fundamentals Group online turnover Africa Pursuing operational excellence A N N U A L I S E D A N N U A L I S E D T U R N O V E R T U R N O V E R Orders 25% delivered in R5bn R1,3bn under
Slide 13: Rise and Shein
B O L T S Rise and Shein Big e-tail has checked in to South Africa Source: apptopia.com TFG Interim Results Presentation 13
Slide 14: Say hi to Bash
B O L T S Say hi to Bash A new fashion & lifestyle shopping platform for a growing community of connected buyers in South Africa. Bash launched in beta in June in under 8 months versus an industry average of 18-24 months Over 200+ brands on the app in more than 400 One home for all of TFG’s brands c
Slide 15: ESG: Better for all our stakeholders
B O L T S ESG Better for all our stakeholders We have 3 ambitious sustainability goals built around FASHION THAT CONNECTS FASHION THAT SHARES FASHION THAT RESTORES People and their passion The benefit of enteprise Our relationship with nature H1 people and their passion highlights: New diversity and
Slide 16: Financial Review
02 FINANCIAL REVIEW Bongiwe Ntuli Group CFO
Slide 17: Group Performance
Group Performance Headline earnings of R1,5bn; up 17,9% on H1’2022; EPS up 44,5% Profit after tax R1,5bn Retail +44,3% R15,4bn EBIT +16,9% turnover R23,5bn R2,6bn Tax +23,5% +40,7% R0,6bn Gross Profit Finance costs R11,6bn Trading Expenses R0,5bn +24,8% R9.9bn +19,6% Interest income R3,5bn R0,8bn Ne
Slide 18: Group Headline earnings
Group | Headline earnings Impairments and Deferred tax rate change impacts prior year earnings +44.2% % growth 42,1 1 498,1 417,4 HEADLINE EARNINGS +18% on H1’2022 R millions 1 270,0 -182,4 1 038,6 -48,9 H1'2022 Impairments UK Deferred H1'2022 Profit growth Tapestry H1'2023 Reported Tax write offs B
Slide 19: Group Retail turnover
Group | Retail turnover Record high 6 months at R23,5bn; up 23,5% +A$132m R23,5bn Like for like growth +11,4% +£31m Online +R2,2bn +2,6% (8,9% contribution) R19,0bn Cash Sales R18,9bn (+25,5% growth) Credit Sales +15,8% (19,6% contribution) Africa H1'2022 Africa London Australia H1'2023 c.R400m turn
Slide 20: Group Retail turnover by category and segment
Group | Retail turnover Growth in all categories and customer segments MERCH CATEGORY – MIX AND GROWTH CUSTOMER SEGMENT – MIX AND GROWTH % growth % growth +24,7% Value 38,4% +33,5% 83,2% Clothing 2,7% +4,8% Jewellery Mid 18,1% +7,0% Cosmetics 1,9% +5,8% Mid to upper 41,4% +22,9% Cellphones 5,8% +0,2
Slide 21: Group Gross profit
Group | Gross profit Gross Margin +50bps; gross profit +24.7% ~ additional R2,3bn banked Margin Margin Group 48.8% 49.3% 49,3% +R2,3bn +A$101m R11.6bn Africa +£16m 42,0% (43,4% H1’2022) +R0.8bn +R0,8bn (R6,5bn) R9.3bn UK 57,5% (58,6% H1’2022) +R307m (R2,0bn) Australia H1’2022 1H22 Africa Africa UK L
Slide 22: Group Other income
Group | Other income 14% up on last year % of turnover 7,2% 6,7% Credit Income +22% Healthy book R1,6bn Growth less than credit sales 110 R1,4bn Interest Income 150 439 +R157m 370 Interest rates + 275bps vs H1’2022 Value Added Services 1 036 +19% on H1’2022 Rand millions 849 Sundry Income H1'2022 H1
Slide 23: Group Trading expenses
Group | Trading expenses Decrease 260bps in base business despite continued investment % of 45,0% 42,4% 43,5% Employment Occupancy* turnover R4,2bn (R3,3bn H1’2022) R2,6bn (R2,3bn H1’2022) 17,7% of turnover (17,1% H1’2022) 10,9% of turnover (12,0% H1’2022) R9.9bn Depreciation* Other costs R9.8bn R46
Slide 24: Group EBIT margin evolution
Group | EBIT margin evolution EBIT up R756m on H1’2022 (+41%) % of 9,8% 12.6% 11,8% 11,1% turnover Group 7.7% 9.8% 11,1% 591,0 2 898,2 50,8 -180,2 2 718,1 Africa 2 613,7 -155,2 Strategic cost absorption & investment 80,1 369,8 UK & Australia Product margin expansion 1 857,4 Rigorous cost control Cyc
Slide 25: Group Key Balance Sheet metrics
Group | Key Balance Sheet metrics Net Debt : Driven by organic (stores) and inorganic (acquisition of Tapestry) WORKING Healthy Debtors Book Investing for Growth CAPITAL • Tapestry Acquisition R7,1bn (R2.1bn) H1’2022: R6,5bn • +R900 (10.7%) growth in H1’2021: R6,8bn gross book • Stock ahead of Black
Slide 26: Group Inventory
Group | Inventory Stock growth of 29,3% vs March 22 year end 140 days 154 days Stock Health Conservative provisioning H1’2023 R8,5bn R12,1bn R1,5bn (10,8%) H1’2022: R1,1bn (11,8%) Stock fresh 1,4 1,0 28,9% Merchandise Inflation c.14% 1,4 0,7 59,1% Group 9,7 12,0% +29.3% 6,4 Rand billions • 22.7% gro
Slide 27: Group Capital Expenditure
Group | Capital Expenditure Investment throughout the cycle % H1’2023 H1’2022 Expansion capex to turnover 2,4 2,5 Maintenance capex to turnover 1,6 1,6 934 Total capex to turnover 3,8 4,1 745 New Outlets Strategic upgrades (revamps) + 159 new stores YTD R346m c.R0.3bn new turnover R228m 11,4% like f
Slide 28: Group Cash Flow
Group | Cash Flow R4.9bn cash operating profit; up 17.7 % on LY Cash balances at March 2022 5,7 Cash operating profit 4,9 Cash operating profit increase of 17,7% OPERATING Net working capital 3,4 -R0,8bn Robust stock build - new stores and peak Interest and Taxation 1,3 season trade , healthy credit
Slide 29: Group Funding
Group | Funding NET DEBT VS ADJUSTED EBITDA* Total facilities R14,4bn Leverage 0.22x 0.80x 1.15x (R30bn pre-approved facility) 12,2 Available cash 10,1 R5,3bn 6,5 5,9 6,0 Interest cover 3,6 Rand billions 8.1x Weighted average debt H1'2022 H1'2023 (excl. Tapestry) H1'2023 cost Gross debt Adjusted EBI
Slide 30: Segmental Performance: TFG Africa
03 SEGMENTAL PERFORMANCE: TFG AFRICA Bongiwe Ntuli Group CFO
Slide 31: Proudly SA
Proudly SA PROUDLY SA JEWELLERY PRODUCTION • 140k units locally produced at a retail selling price c.R700m • Robust clearances • Every month over 10,000 South African Brides celebrate their special moment with our proudly South African Diamond rings TFG Interim Results Presentation 31
Slide 32: Africa Performance highlights
Africa | Performance highlights Turnover growth ahead of market at +16.9% EBIT Interest income R0.8bn R1.4bn Profit after tax Gross profit +26.0% +6.3% R0.7bn R6.5bn +13.1% Other income R0.8bn +7.9% Tax Trading expenses R0.3bn R6.0bn Finance costs Turnover Net bad debt R0.5bn R15.4bn R0.6bn +16.9% C
Slide 33: Africa Trading expenses
Africa | Trading expenses Relentless focus on costs, decrease 90bps • Sales growth of 16.9% ahead of expense growth of 14,3% % of 39.7% 38.9% 38.8% • Store expansion related growth and other cost inflation turnover R5,2bn R5,8bn R6,0bn Employment Costs Occupancy* R2.4bn R1.6bn 10,4% of turnover (H1’
Slide 34: Africa EBIT evolution
Africa | EBIT evolution Base business EBIT margin of 11,5% EBIT 10,3% 11,5% 10.3% 9,4% margin% 693,8 Gross Profit 13,1% increase on prior year to 43,9 * 1 730,6 R6.5bn -367,9 50,8 1 550,4 -180,2 1 446,0 Cyclical Costs -155,2 1 360,8 Logistics costs c.R80m Load shedding margin loss c.R100m Investment
Slide 35: Africa Outlook
Africa | Outlook Cautiously optimistic despite: • Eskom load shedding • Inflationary pressures • Freight rate and exchange rate pressures - But adequate covers in place - Continued value/price engineering Continued expense optimisation Drive margin expansion in line with economic conditions Discipli
Slide 36: Segmental Performance: TFG Africa Credit
03 SEGMENTAL PERFORMANCE: TFG AFRICA CREDIT Jane Fisher Group Director
Slide 37: Transunion Consumer Credit Index Q2 2022
Transunion Consumer Credit Index Q2 2022 Index at its lowest level since Q3 2020 TransUnion, ETM, Macro Advisors, Macrobond TransUnion, ETM, Macro Advisors, Macrobond § The TransUnion Consumer Credit Index fell by six points to 49 during Q2 of 2022, now at it’s lowest level since Q3 2020 § Household
Slide 38: Credit demand
Credit demand Demand continues to exceed expectations NEW ACCOUNTS VOLUME IN ‘000 KEY PERFORMANCE INDICATORS 2 400 60% 2 000 Applications Approval rates 1 600 40% +90% c. 21% 1 200 FY22 H1: +136% FY22 H1 : c.25% 800 20% 400 Account base Gross book -0 0% 2,7 million R8,9bn H1 H2 H1 H2 H1 H2 H1 H2 H1
Slide 39: Credit performance
Credit performance Robust payment behaviour PAYMENTS KEY PERFORMANCE INDICATORS 125% 16% Overdue Impairment Net bad debt 100% 12% 12,8% 20,1% 12,4% 75% 8% 50% MAR ‘22: 12,8% MAR ‘22: 19,1% MAR ‘22: 11,3% 4% 25% SEP ‘21 : 14,4% SEP ‘21 : 20,0% SEP ‘21 : 11,6% 0% 0% Apr Ma y Jun Jul Aug Sep Cash colle
Slide 40: Credit EBIT summary
Credit EBIT summary Growth in base drives increase in profitability TFG AFRICA TFG AFRICA TFG AFRICA H1 FY 2023 (Rm) H1 FY 2022 (Rm) % CHANGE Income 1 036,3 848,6 22,1% Net bad debt (622,5) (496,3) 25,4% Credit costs (294,6) (280,3) 5,1% EBIT 119,2 72,0 65,5% Income Net bad debt Credit costs 22% YoY
Slide 41: Financial Services initiatives
Financial Services initiatives TymeBank TFG Mobile Network • First kiosk installed in-store end of July • MVNO launched September • Over 500 kiosks installed to date – 600 • TFGconnect recharge vouchers kiosks to be operational by end November available at till points, on-lineBNPL More Tyme or via l
Slide 42: Segmental Performance: TFG London
03 SEGMENTAL PERFORMANCE: TFG LONDON Justin Hampshire CEO TFG London Matt Wilson CFO TFG London
Slide 43: Performance highlights: TFG London
Performance highlights: TFG London Increased profitability from redesigned business model EBIT Turnover margin % 3.6% 6.2% (22.5%) 6.8% 8.0% 12.6% 10.8% +£30,9m, +21,2% 200,4 200,7 Gross profit 176,6 +£16,1m, +18,9% 145,7 57.5% margin (H1’2022:58,6%) 126,3 123,8 Trading expenses 101,6 88,0 85,4 49.6
Slide 44: Outlook: TFG London
Outlook: TFG London Strong first half performance driven by higher quality earnings and competitive landscape with improving bricks and mortar contribution Positive cash generation with more normalised stock profile driven by improving freight backdrop Second half outcome dependant on key trading pe
Slide 45: Segmental Performance: TFG Australia
03 SEGMENTAL PERFORMANCE: TFG AUSTRALIA Gary Novis CEO TFG Australia Dean Zanapalis CFO TFG Australia
Slide 46: Performance highlights: TFG Australia
Performance highlights: TFG Australia Buoyant trade after lifting of COVID restrictions EBIT Turnover margin % 9.4% 10.2% 9.3% 10.2% 19.5% 12.6% 10.8% 10.4% Sales up A$131,6m, +48,7% Comp Store Growth +18,5% 401,8 COVID closures Currently - No lost trade days H1’2022 – Lost 50% of Aug & Sept 265,4 2
Slide 47: Outlook: TFG Australia
Outlook: TFG Australia STRATEGY Remains unchanged and on track • Continue existing Brands growth strategy: Australia and New Zealand • Continue investment in Johnny Bigg USA (online site) • Continue to build on the Digital Hub - Centre of Excellence • Complete re-platforming ERP and digital platform
Slide 48: Strategy & Outlook
04 STRATEGY & OUTLOOK Anthony Thunström Group CEO
Slide 49: Our growth formula
Our growth formula How we do it, and our runway for the future Indexed comparison of competitor turnover - Africa 180% 160% 160% 1 2 3 4 Data-led Build out of new brands Customer value maximization Diversification from location strategies and businesses through Rewards and VAS new verticals 154% 140
Slide 50: Stores, stores and more stores!
Stores, stores and more stores! Unprecedented store development and resilience R O L L - O U T S R E S I L I E N C E Back-up power roll out to 57% of stores protects 68% of turnover • c. 350 new stores Total lost trading hours by • R2,9bn annualised turnover % of stores % of turnover month 60 000 50
Slide 51: Stores, stores and more stores!
Stores, stores and more stores! High brand equity businesses ready to build out their footprint in new locations Current number In 3 years of stores • Most of our brands have significant H1 expansion capacity Relay 112 156 Jeans • Similar and better expected returns • Diversity in fashionability and
Slide 52: Executing our transformative strategy at scale
Executing our transformative strategy at scale The Group’s Strategy Office integrates our planning and execution across our business Purpose We Inspire our Customers to Live their Best Lives 5252525252 • The Group’s aspiration is supported by an ambitious program of transformative projects, M&A pipe
Slide 53: Outlook: Strong start to H2
Outlook: Strong start to H2 Best positioned through cyclical headwinds C H A L L E N G E O U R R E S P O N S E Extent of loadshedding Rapid rollout of back-up power solutions Cost of living affecting consumers Investment in brand strength and price architecture Dependent on Black Friday & Christmas
Slide 54: Appendix
APPENDIX
Slide 55: Geographical Mix
5555555555 Geographical Mix TFG Turnover +23,5%, Gross Margin expands to 49,3% and EBIT Margin 11,1% TFG LONDON Contribution 15% Turnover £177m (+21,2%) Gross Margin 57,5% EBIT margin 8,0% TFG AUSTRALIA Contribution 19% Turnover A$402m (+48,7%) Gross Margin 67,8% EBIT margin19,5% TFG AFRICA Contribu
Slide 56: Credit | Additional Information
Credit | Additional Information TFG AFRICA TFG AFRICA TFG AFRICA % change H1’2023 H1’2022 FY22 Income (Rm) 1 036,3 848,6 22,1% 1 742.9 Net bad debt (Rm) (622,5) (496,3) 25,4% (983.8) Credit costs (Rm) (294,6) (280,3) 5,1% (584.4) EBIT (Rm) 119,2 72,0 65,5% 174.7 Number of applications 2 257 431 1 18
Slide 57: Our Footprint
OUR FOOTPRINT
Slide 58: Global footprint
Global footprint TFG OUTLETS 4 399 COUNTRIES 24 TFG AFRICA OUTLETS TFG LONDON OUTLETS TFG AUSTRALIA OUTLETS 3 188 632 579 CONTRIBUTION TO TURNOVER CONTRIBUTION TO TURNOVER CONTRIBUTION TO TURNOVER 66% 15% 19% TFG Interim Results Presentation
Slide 59: Footprint movement since April 2022
Footprint movement since 1 April 2022 TFG AFRICA TFG LONDON 688,0 12,0 136,0 3188,0 3087,0 -35,0 3 087 632,0 688 Apr 22 -68,0 Apr 22 3 188 632 Sep 22 Sep 22 01 Apr 22 New outlets Closed outlets 30 Sep 22 01 Apr 22 New outlets Closed outlets 30 Sep 22 TFG AUSTRALIA GROUP 11,0 576,0 579,0 -8,0 159,0 4