Foschini Group Limited · JSE:TFG
Foschini — TFG — H1 2024 Earnings Presentation
70 slides from Foschini's earnings presentation, November 2023
Slide 1: TFG Results Presentation
TFG RESULTS PRESENTATION For the half-year ended 30 September 2023
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 3
Slide 4: Strong underlying performances despite challenging headwinds
Strong underlying performances despite challenging headwinds Revenue Turnover Group gross EBITDA HEPS H1 TFG Africa margin Group 2024 +17.3% -2.1% +8.3% -15.3% Group +12.9% R28.4bn TFG London 47.3% R5.3bn 393.6c Results +6.3% Gross profit Operating profit Interim dividend e-Commerce TFG Australia +7
Slide 5: TFG Africa trading overview for H1
TFG Africa trading overview for H1 Swift and effective tactical response to unprecedented load-shedding and difficult consumer environment 10,0 41,7% 3. 40,9% 5. 1. Stock levels elevated due to 37,9% 37,8% 37,2% 36,6% load shedding; acquisitions 9,8 and PY LFL run rate 1. 9,6 2. Weak initial turnove
Slide 6: Continued market share gains in TFG Africa
Continued market share gains in TFG Africa Our brands continued to take share from major competitors TFG Sales Growth vs Market YoY change in retail sales Women, Men, Kids and Babies categories TFG Homeware and Furniture 20% 25% 20% 15% 15% 10% 10% 5% 5% 0% 0% Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-
Slide 7: Near record international performances
Near record international performances London and Australia are both performing strongly ahead of pre-COVID levels and coming off elevated PYs London Australia 450 200 Millions Millions 400 350 150 300 250 100 200 150 50 100 50 0 0 H1 2021 H1 2022 H1 2023 H1 2024 H1 2021 H1 2022 H1 2023 H1 2024 -50
Slide 8: Our strategy remains on track and we continue to deliver against it
Our strategy remains on track and we continue to deliver against it Build out Optimise Leverage Transform Sustain diversified, high brand our sourcing mix and our customer data, store into a true omnichannel ourselves and our equity businesses supply chain efficiency footprint, talent and retailer a
Slide 9: Strategy: Build out
Our strategy remains on track and we continue to deliver against it Build out diversified, high brand equity businesses Opened 199 new stores Street Fever and Tapestry now integrated TFG Results Presentation – for the half-year ended 30 September 2023 9
Slide 10: Tapestry integration completes Homeware and Furniture foundation
B O L T S Tapestry integration completes the foundation of our Homeware and Furniture powerhouse Synergistic benefits continue to be realised Credit 3x contribution since acquisition Vertical integration R65m+ investment in factories and DCs by TFG + IDC Sofa manufacture Prices reduced by 15% GP imp
Slide 11: Strategy: Build out and Optimise
Our strategy remains on track and we continue to deliver against it Build out Optimise diversified, high brand our sourcing mix and equity businesses supply chain efficiency 4% QR margin Opened 199 new uplift for Foschini stores 111 stores Street Fever and optimised Tapestry now integrated Leading t
Slide 12: Optimising our trading density
B O L T S Optimising our trading density • TFG now leading trading density • Continued optimisation through cut-ins, visual merchandising and layout optimisation improvements Competitor 1 Competitor 2 Competitor 3 Source: Absa Analysis, FactSet, Company Financials. Note (1) FactSet Data as at24 Octo
Slide 13: Introducing our new Riverfields omni-enabled DC
B O L T S Introducing our new 75,000m2 Riverfields omni-enabled DC An integral part of our logistics centralisation and efficiency strategy 1. Consolidation and 2. E-commerce delivery 3. Integrates JET operations capacity closer to market capacity and efficiencies and enables transport savings NUMBE
Slide 14: Strategy: Build out, Optimise, Leverage
Our strategy remains on track and we continue to deliver against it Build out Optimise Leverage diversified, high brand our sourcing mix and our customer data, store equity businesses supply chain efficiency footprint, talent and brands 4% QR margin +1.5m new Opened 199 new uplift for Foschini Rewar
Slide 15: Most remarkable omnichannel experiences for our customers
B O L T S Recognised as creating the most remarkable omnichannel experiences for our customers Brand Finance SimilarWeb askafrika South African Loyalty Awards South Africa’s Most Valuable Brands #1 Category rank Best Clothing Store - Sportscene Best multi-channel rewards campaign 22.6m+ social media
Slide 16: Strategy: Transform
Our strategy remains on track and we continue to deliver against it Build out Optimise Leverage Transform diversified, high brand our sourcing mix and our customer data, store into a true omnichannel equity businesses supply chain efficiency footprint, talent and retailer and platform play brands 4%
Slide 17: Bash continues to surpass all expectations
B O L T S Bash continues to surpass all expectations Online YoY growth has been phenomenal Online retail Clothing Multi-brand turnover growth YoY orders +54% +62% +135% First time App App revenue buyers Sessions YoY % of total 26% +414% >50% at Sept ‘23 TFG Results Presentation – for the half-year e
Slide 18: Bash = scale x efficiency
B O L T S Bash = scale x efficiency Most of our brands were outside of the Top 20. Now Bash puts us first in SA fashion and 4th overall. Operating and fulfilment costs continue to reduce (-9% YoY) Improved profitability over 3 years Omni-channel benefit already justifies the investment TFG Results P
Slide 19: What's next for Bash?
B O L T S What's next for Bash? We are taking the app to our stores… • Endless-aisle improves availability • Enables cross-selling opportunities • Empowers store employees Employees can potentially sell 16X the SKU range of the average store! TFG Results Presentation – for the half-year ended 30 Sep
Slide 20: Strategy: Sustain
Our strategy remains on track and we continue to deliver against it Build out Optimise Leverage Transform Sustain diversified, high brand our sourcing mix and our customer data, store into a true omnichannel ourselves and our equity businesses supply chain efficiency footprint, talent and retailer a
Slide 21: Committed to community: 2030 commitments
B O L T S Committed to community Introducing our 2030 commitments FutureForce E/Scalator FirstStart ExtraThread RippleEffect Investing in scarce skills Taking small Enterprise First job, endless Surplus merchandise for Bringing clean water for modern retail and to and Suppliers to the next possibili
Slide 22: Group Financial Review
02 GROUP FINANCIAL REVIEW Bongiwe Ntuli Group CFO
Slide 23: Group | Segmental Performance
Group | Segmental Performance % Growth on RETAIL TURNOVER R’bn Africa London Australia Group H1 2023 +R2.9bn on H1 2023 Revenue 20.1 3.7 4.6 28.4 12.9% +8.9% Retail Turnover 18.1 3.7 4.6 26.4 12.4% ex Tapestry Gross Profit 7.2 2.4 2.9 12.5 7.7% Gross Margin % 39.5% 64.3% 63.9% 47.3% -2.1% EBITDA R5.
Slide 24: Segmental Performance: TFG Africa
03 SEGMENTAL PERFORMANCE: TFG AFRICA Bongiwe Ntuli Group CFO
Slide 25: TFG Africa | Operating & Accounting Context
TFG Africa | Operating & Accounting Context • Persistent daily load shedding, partially mitigated by back up power • High promotional activity LOADSHEDDING • High inflation • High interest rate environment: +200bps since September 2022 ECONOMY RIM* to WAC** adoption • No impact on EBIT • Operational
Slide 26: TFG Africa | Performance
TFG Africa | Performance RETAIL TURNOVER +17.3% Including % Growth Excluding % Growth R’bn Tapestry on H1 2023 Tapestry on H1 2023 Like for like* 17.3% 11.9% +4.2% Retail Turnover 18.1 16.8 Gross Profit 7.2 10.4% 6.5 3.6% CASH SALES Gross Margin % 39.5% -2.5% 38.7% -3.1% +23.1% +3.5% Credit sales Ne
Slide 27: TFG Africa | Retail Turnover and Gross Profit
TFG Africa | Retail Turnover and Gross Profit +17.3% turnover, +10.4% gross profit Retail Turnover Growth LFL turnover growth Gross Profit Growth Gross Margin % Turnover 20,0% 18,4% 16,9% 15,6% Quarter 2 14,2% Quarter 1 (Q2 ‘24 vs Q2 ‘23) (Q1 ‘24 vs Q1 ‘23) 8,6% 1,3 18,1 7,2% 5,7% +50.1% 0,1 0,8 16,
Slide 28: TFG Africa | Trading Expenses
TFG Africa | Trading Expenses Trading expenses +11.1% vs Turnover +17.3% Trading Expenses as a % of Retail Turnover 38.8% LFL Store Expenses** +3.9% on H1 2023 Head Office Costs 37.0% 36.8% -2.1% on H1 2023 H1 2023 FY 2023 H1 2024 OCCUPANCY*: DEPRECIATION*: • 10.3% of turnover (10.4% H1 2023) • 2.6%
Slide 29: TFG Africa | EBIT
TFG Africa | EBIT Operating leverage: +19.4% EBIT vs +17.3% Turnover EBIT 9.4% 9.3% 9.3% 9.5% Margin % +19.4% • Increase in Credit EBIT contribution 0,3 0,2 1.8 • Tight cost control (0,1) ,168.8 1,726.6 0,2 0,1 1,6 1,4 • EBIT margin growth on H1 2023 1,4 (0,3) in a challenging environment +3.9% on L
Slide 30: TFG Africa | A story of a 5+1 half
TFG Africa | A story of a 5+1 half Gross Margin vs Turnover Growth 42,2% 41,6% 38,8% 38,1% 37,7% 38,7% 53.3% 21,4% 22,9% 22,4% 16,6% 13,2% 5,8% 24,6% 22,4% April May June July August September 16,1% 2023 2023 2023 2023 2023 2023 11,9% 9,6% Turnover growth % Gross Margin 7,2% 3,3% April - August Sept
Slide 31: Balance Sheet
Balance Sheet
Slide 32: Group | Balance Sheet
Group | Balance Sheet % Growth on R’bn Africa London Australia Group FY 2023 Group Inventory Non-current assets -2.4% Property, plant and equipment 4.3 0.4 0.9 5.6 7.4% Goodwill and intangible assets 4.1 2.5 3.6 10.2 4.1% Like for like growth* Other non-current assets 8.8 0.8 2.4 12.0 6.6% c. -8.0%
Slide 33: TFG Africa | Inventory
TFG Africa | Inventory Inventory at R9.8bn, -3.1% on FY23 (-5.7% excluding Tapestry and Street Fever) 3 361 3 524 3 644 Inventory Days No. of stores • Closing stock merchandise inflation: 155 days c.10.1% H1 2023: 158 days • Over 75% of stock is less than 26 weeks old R10.1bn LFL stock growth • Inve
Slide 34: TFG Africa | CAPEX
TFG Africa | CAPEX Conservative capex spend, 4.0% of turnover % of turnover 5.9% 6.5% 4.0% • Logistics • Distribution Centre strategic expansion R167m R2.3bn Other • Expansionary R338m 6% • R240m store capex: Logistics • Organic growth – 66 new stores 23% Stores ex 4.0% • 11 new Tapestry stores Tape
Slide 35: TFG Africa | Key Cash Flow Metrics
TFG Africa | Key Cash Flow Metrics Cash Operating Profit Working Capital Investing Activities R3.0bn -R0.6bn -R0.9bn H1 2023 R2.7bn H1 2023 -R3.2bn H1 2023 -R2.9bn Net Debt* Facilities R8.1bn R15.8bn H1 2023 R9.7bn H1 2023 R12.5bn *pre-IFRS 16 TFG Results Presentation – for the half-year ended 30 Se
Slide 36: Thank You
THANK YOU 36
Slide 37: Segmental Performance: TFG Africa Credit
03 SEGMENTAL PERFORMANCE: TFG AFRICA CREDIT Jane Fisher Group Director 37
Slide 38: Credit demand
Credit demand Accept rates stable NEW ACCOUNTS VOLUME IN ‘000 KEY PERFORMANCE INDICATORS 2 500 000 60% Credit Turnover Cash Turnover Growth Growth 2 000 000 H1 2024: +3.5% H1 2024: +23.1% 35,8% 40% 34,7% 1 500 000 FY 2023: +11.0% FY 2023: +19.7% 25,6% 23,9% 1 000 000 19,0% 20,9% H1 2023: +15.8% H1 2
Slide 39: Credit performance
Credit performance Write-off growth from double-digit book growth YOY BOOK GROWTH VS BAD DEBT WRITE-OFF KEY PERFORMANCE INDICATORS Book term in Overdue values 15% days 1 400 Millions 31 28 10% 1 200 30 H1 2024: 278 H1 2024: 13.3% 1 000 5% FY 2023 : 278 FY 2023: 13.3% 800 0% H1 2023: 265 H1 2023: 12.
Slide 40: Credit Summary
Summary Income growth from larger book and rate increases Bad debt Recoveries Income write-off and VAT Provisions Costs EBIT NET BAD INCOME DEBT 1 500 R1.36bn (R667m) Millions 1 000 +31% +24.8 +7% +24.8 % % 500 - -5 00 CREDIT EBIT COSTS R377m (R312m) -1 000 +6% +24.8 +216% +24.8 -1 500 % % 2023 H1 2
Slide 41: Segmental Performance: TFG London
03 SEGMENTAL PERFORMANCE: TFG LONDON Justin Hampshire CEO TFG London Matt Wilson CFO TFG London 41
Slide 42: TFG London – Operating Context
TFG London – Operating Context • Correction in consumer behaviour post Covid spiked demand • Focus on increasing direct channel mix • Leveraging omnichannel proposition across markets • Acquisition of remainder of Hong Kong Joint Venture • Continued store portfolio optimisation • Inflation and inter
Slide 43: TFG London | Performance highlights
TFG London | Performance highlights H1’2024 EBIT ahead of prior year despite challenging conditions EBIT margin % 6.8% 8.0% 9.0% • UK direct LFLs of -2.6% • International direct LFLs of +6.2% • 8 new store openings and 12 closures 176,6 158,0 • Gross margin improvement (+6.8ppts vs. 145,7 LY) 101,6
Slide 44: TFG London | Inventory
TFG London | Inventory +6.9% vs. YE position, driven by trading outcomes Inventory Stock Health Focus on stock levels 23,6% 53,8 57,5 • Overall units reduced by 11% 13,9% 35,0 62,5% • Less than 25% of stock > 6 months old £’m FY 2022 FY2022 FY 2023 FY2023 H1 2024 H1'2024 • Conservative provisioning
Slide 45: TFG London | Outlook
TFG London | Outlook • Continued pressure on consumer • Data-led approach to customer acquisition • 5* customer experience • International strategy execution • Continued rollout of bigger, better own stores • Positive cash generation and strong balance sheet TFG Results Presentation – for the half-y
Slide 46: Segmental Performance: TFG Australia
03 SEGMENTAL PERFORMANCE: TFG AUSTRALIA Dean Zanapalis CEO TFG Australia Troy Wilson CFO TFG Australia
Slide 47: TFG Australia – Operating Context
T h TFG Australia – Operating Context e p i c t u r e c a • Normalising demand for “dressy” product categories n ’ t • Interest rate rises b e d • Cost of doing business pressures including award wage increases i s p • Unemployment remains historically low l a y • The economy continues to grow, albe
Slide 48: TFG Australia | Performance highlights
TFG Australia | Performance highlights Second biggest first half on RAG record EBIT margin % 10.2% 19.5% 12.5% • Strong H1 EBIT result despite challenging operating context • Revenue down 7% vs prior year 401,8 • Comp store sales significantly up vs Pre 373,0 372.8 COVID-19 270,2 272,5 • EBIT % rema
Slide 49: TFG Australia | Inventory
TFG Australia | Inventory 10.8% reduction in the stock balance from year end Inventory Stock Health 0,6% Current Season • Total units successfully managed 152,5 136,0 12,0% Season -1 • 82.1% of stock is current season 110,3 Season -2 • Conservative provisioning Season -3 82,1% AGED A$’m FY 2022 FY20
Slide 50: TFG Australia | Outlook
TFG Australia | Outlook • As previously communicated, 2023 was a “one off”, driven by a post pandemic boom in dressy product • Despite the operating context, we remain on track to return to our normalized growth (above FY 2022) • Business has done brilliantly managing inventory and costs aligned to
Slide 51: Strategy and Outlook
04 STRATEGY AND OUTLOOK Anthony Thunström Group CEO
Slide 52: Outlook
Outlook TFG’s strategy remains unchanged Consolidation phase well on track to be completed by year-end: Capex Inventory Net Debt Leverage R2.3bn ↓ R774m -6.2% on PY Net debt Net debt/ EBITDA Capex % of T/O: FY 2023: R13bn FY 2023: R7.1bn FY 2023: 1.2x FY 2023: 6.0% FY 2024: R12.3bn FY 2024: R6.4bn F
Slide 53: Foundations for the future
Foundations for the future 34 high Turning this… equity brands into this… • R18bn Africa Turnover Leading and 4800+ • 1 item sold to every South African • 170m+ H1 Africa store visits popular credit stores • 72m H1 online sessions offering • 35m+ Rewards customers Every minute we sell: • 20m+ social
Slide 54: Current trading update
Current trading update 5-week trading update Africa London Australia (£) (A$) Turnover growth +5.6%* +1.6% -10.2% 2-year growth Turnover growth +17.4%* -1.3% +56.2% *Excludes Tapestry • TFG Africa well positioned to take further share and expand margins off a clean stock position • TFG London – caut
Slide 55: Appendix
APPENDIX This announcement contains certain forward-looking statements with respect to the financial conditions and results of operations of the Foschini Group Limited and its subsidiaries, which by their nature involve risk and uncertainty because they relate to events and depend on circumstances t
Slide 56: Additional Financial Information
ADDITIONAL FINANCIAL INFORMATION 56
Slide 57: Group | Income Statement
Group | Income Statement 30 Sept 30 Sept 2023 2022 % Change Rm Rm H1 Revenue 28,395.0 25,155.3 12.9 Retail turnover 26,410.9 23,494.5 12.4 Gross profit 12,484.7 11,591.6 7.7 Interest income 1,032.5 760.1 35.8 Insurance revenue 145.5 130.0 11.9 Other income 806.1 770.7 4.6 Net bad debt (667.7) (622.5
Slide 58: Group | Trading expenses
Group | Trading expenses 30 Sep 30 Sep 30 Sep 30 Sep Group 2023 2022 % Change TFG Africa 2023 2022 % Change Rm Rm H1 Rm Rm H1 Depreciation 579.7 463.5 25.1 Depreciation 468.9 356.9 31.4 Employee costs 4,732.6 4,155.4 13.9 Employee costs 2,730.7 2,391.3 14.2 Occupancy costs 2,991.1 2,553.3 17.1 Occup
Slide 59: TFG Africa | Income Statement
TFG Africa | Income Statement 30 Sept 30 Sept 2023 2022 % Change Rm Rm H1 Revenue 20,073.8 17,088.0 17.5 Retail turnover 18,092.1 15,427.3 17.3 Gross profit 7,153.6 6,479.9 10.4 Interest income 1,030.1 760.1 35.5 Other income 806.1 770.7 4.6 Insurance revenue 145.5 130.0 11.9 Net bad debt (667.7) (6
Slide 60: TFG London | Income Statement
TFG London | Income Statement 30 Sept 30 Sept 30 Sept 30 Sept 2023 2022 % Change 2023 2022 % Change £m £m H1 Rm Rm H1 Revenue 158.0 176.6 (10.5) Revenue 3,718.1 3,496.4 6.3 Retail turnover 158.0 176.6 (10.5) Retail turnover 3,718.1 3,496.4 6.3 Gross profit 101.6 101.6 - Gross profit 2,391.3 2,011.0
Slide 61: TFG Australia | Income Statement
TFG Australia | Income Statement 30 Sept 30 Sept 30 Sept 30 Sept 2023 2022 % Change 2023 2022 % Change A$m A$m H1 Rm Rm H1 Revenue 373.0 401.8 (7.2) Revenue 4,603.1 4,570.9 0.7 Retail turnover 372.8 401.8 (7.2) Retail turnover 4,600.7 4,570.9 0.7 Gross profit 238.2 272.5 (12.6) Gross profit 2,939.7
Slide 62: TFG Africa | Other Income
TFG Africa | Other Income +19.9% growth in other income is driven by growth in credit interest 9.9% 10.1% • Credit Interest Income • 38.5% up on H1 2023 • Interest rates +50bps R1.8bn • Increased service fees • Larger debtor’s book +9.1% R1.5bn on LY 0,5 • Conservative accept rates c.17.4% (20.9% H1
Slide 63: Transunion Consumer Credit Index Q2 2023
Transunion Consumer Credit Index Q2 2023 Index lowest on record at 39 TransUnion TransUnion. ETM. Macro Advisors. Macrobond TransUnion. ETM. Macro Advisors. Macrobond • Rising debt service costs and potential for further rate hikes • New defaults returned to normal levels • Credit and store card uti
Slide 64: Credit | Additional Information
Credit | Additional Information TFG AFRICA H1 % TFG AFRICA H1 TFG AFRICA FY24 CHANGE FY23 FY23 Income (Rm) 1 355.5 30.8% 1 036.3 2.277.7 Net bad debt (Rm) (667.0) 7.1% (622.5) (1.349.2) Credit costs (Rm) (312.0) 5.9% (294.6) (617.0) EBIT (Rm) 376.5 215.7% 119.2 311.5 Number of applications 2,031,040
Slide 65: Our Footprint
OUR FOOTPRINT 65
Slide 66: Global Footprint
Global Footprint TFG OUTLETS 4 805 COUNTRIES 23 TFG AFRICA OUTLETS TFG LONDON OUTLETS TFG AUSTRALIA OUTLETS 3 644 564 597 CONTRIBUTION TO TURNOVER CONTRIBUTION TO TURNOVER CONTRIBUTION TO TURNOVER 68.5% 14.1% 17.4% TFG Results Presentation – for the half-year ended 30 September 2023 66
Slide 67: Footprint movement since April 2023
Footprint movement since 1 April 2023 TFG AFRICA TFG LONDON 77 589 12 91 3 644 564 3 524 3 524 (48) (37) 589 Apr 23 Apr 23 3 644 01 Apr 23 New outlets Closed outlets 30 Sep 23 564 Acquisition Closed outlets Sep 23 01 Apr 23 New outlets 30 Sep 23 Sep 23 TFG AUSTRALIA GROUP 584 584 19 597 4 697 91 108
Slide 68: TFG Africa Footprint
TFG Africa Footprint Country Stores South Africa 3,415 Namibia 100 Zambia 29 Botswana 59 Lesotho 21 Eswatini 20 South Africa Stores Eastern Cape 351 Free State 192 Gauteng 971 KwaZulu-Natal 456 Limpopo 308 Mpumalanga 329 North West 187 Northern Cape 105 Western Cape 516 TFG Results Presentation – fo
Slide 69: TFG London footprint
TFG London footprint Europe Total Stores Concessions UK & Ireland 408 156 252 Switzerland 6 6 0 Germany 26 2 24 Spain 19 0 19 Netherlands 9 2 7 North America Total Stores Concessions USA 29 0 29 Mexico 33 0 33 Asia Total Stores Concessions Hong Kong 12 11 1 Japan 7 0 7 Middle East Total Stores Conce
Slide 70: TFG Australia footprint
TFG Australia footprint Australia Total Stores Concessions Australia 561 519 42 New Zealand 36 36 0 TFG Results Presentation – for the half-year ended 30 September 2023 70