Foschini Group Limited · JSE:TFG
Foschini — The Foschini Group Limited (TFG) — FY2023 Earnings Presentation
57 slides from Foschini's earnings presentation, June 2023
Slide 1: TFG Results Presentation
TFG RESULTS PRESENTATION For the year ended 31 March 2023 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 3
Slide 4: Strong results despite challenges
Strong results despite challenges We faced headwinds in all our territories: and strong results • Global impact of war in Ukraine • High interest rate environment GROSS NET TURNOVER PROFIT PROFIT • Cost of living crisis • Slowing global economic outlook +19.4% +24.8 +18.0% +24.8 +4.0% +24.8 • Load s
Slide 5: International highlights – benefits of diversification
International highlights – the benefits of diversification including currency TFG Australia TFG London § Strong consumer bounce-back post-COVID § Benefitted from new direct-to-consumer model § Retail Turnover of A$810m (+29.8%) § Retail Turnover of £338m (+9.4%) § Record EBIT of A$127.1m (+56%) § Re
Slide 6: TFG Africa Highlights
TFG Africa Highlights Growth momentum and market share gains Sports Market Share Sales Growth vs Market 2021 2022 Women, Men, Kids and Babies categories 13.7% 14.1% 36% 39% 25% 20% Record Black Friday Severe loadshedding 15% 10% TFG Other TFG Other 5% Source: Euromonitor, Calendar Years 2021 and 202
Slide 7: Delivering our BOLTS strategy
Delivering our B O L T S strategy 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 and platform play stakeholders into
Slide 8: Building out our business
Building out our business Acquisitions • Strategic categories • Businesses with clear growth paths • Strong management teams Cost Turnover EBIT Stores Vision Jet R385m* R5.6bn R560m 467 stores R9bn growing to R20bn Value stack Tapestry R2.2bn R2.6bn** R350m** 188 stores R5bn growing to R10bn Home st
Slide 9: A legacy starts today
A legacy starts today Reflecting on a remarkable leadership journey At acquisition FY23 June 2017 400 584 +46% Stores A$374m* A$810m +117% Turnover +354% A$28m* A$127m EBIT Gary Novis CEO TFG Australia *12 months to June 2017 TFG Results Presentation – for the year ended 31 March 2023 9
Slide 10: Financial Review
02 FINANCIAL REVIEW Bongiwe Ntuli Group CFO
Slide 11: Group | Income Statement
Group | Income Statement EPS +4.1% despite the Q4 headwinds, especially the load shedding in Africa EBIT R5.4bn Profit after tax Retail turnover +12.4% R3.0bn R51.8bn +4.0% R38.8bn ex Tapestry +6.9% ex Tapestry +19.4% +17.3% +11.9% Finance costs ex Tapestry +15.2% R1.4bn ex Tapestry +11.9% Gross Pro
Slide 12: Group | Retail Turnover
Group | Retail Turnover +19.4%; ex Tapestry +15.2%, like for like +8.2% ,CASH sales +21.3% +19.4% CAGR ~ 12.8% R8.4 bn (12.0% ex Tapestry) 2,6 51,8 (9.4% ex Jet and Tapestry) 5,2 0,6 51,8 43,4 43,4 A$186.1 33.9 35.2 m 33,0 28.3 R35.5bn £338m A$810m FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 R’bn +17.
Slide 13: Group | Other Income
Group | Other Income* +19.5% Other Income driven by credit income growth % of retail 8.9% 8.9% 8.0% 6.4% 6.5% turnover R3.3bn Credit Income 0,2 • +30.7% up on LY R2.8bn 0,7 • Interest rates +350bps 0,8 0,3 0,8 0,1 • Acceptance rates c.19% (25% LY) 0,7 0,8 • Book growth +10.5% vs. Credit turnover +11
Slide 14: Group | Gross Profit
Group | Gross Profit +R3.8 bn (+18.0%), ex Tapestry +13.8% Estimated impact of load shedding +18.0% +21.8% CAGR ~ 10.7% (9.9% ex Tapestry) (8.1% ex Jet and Tapestry) 24,8 21,0 18,3 18,6 15,0 15,0 0,8 25,6 1,8 24,8 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 0,5 1,5 Africa: GP 41.0% (43.2% LY) 21,0 • L
Slide 15: Group | Trading Expenses
Group | Trading Expenses +19.1% on LY, +15.6% ex Tapestry CAGR ~ 10.6% (9.9% ex Tapestry) (8.7% ex Jet and Tapestry) Trading Expenses as a % of Retail Turnover 21,4 17,8 18,0 15,4 15,8 12,9 45,4% 45,3% 45,1% 44,8% COVID FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 KEY COST BREAKDOWN Costs tightly manag
Slide 16: Group | EBIT
Group | EBIT +12.4%, 13.4% normalised* margin % of retail 11.1% 13.4% 11.8% 10.5% turnover +40,7% -5,3% +12,4% +12.4% H1 H2 FY 581,2 6 694,7 EBIT H2: 266,0 - against a high base (international) 1 246,1 54,7 - impacted by gross margin (increased 5 894,7 provisioning and dealing with slow moving -800,
Slide 17: Group | Key Balance Sheet metrics
Group | Key Balance Sheet metrics STRONG balance sheet Inventory: SHAREHOLDER Net Inventory Inventory Days • Acquisitions: • ex Tapestry & Street Fever +32.2% RETURNS R13.1bn +8 days • Organic growth: • +381 new stores, c. R1.7bn in sales ROCE • Inflation FY2022: R9.3bn • ZAR weakening WORKING 13.3%
Slide 18: Group | Inventory
Group | Inventory +39.8% on LY (base* +c.23.5%) • Africa: • Merchandise Inflation: c.12% • Acquisitions: 4 697 • Tapestry c.R573m +15% growth in stores • Street Fever: stock build c.R141m • Organic growth: 4 351 R13.1bn • c.R760m for 318 new stores 4 284 Majority of stock on hand < 8 weeks • Tapestr
Slide 19: Group | Capex
Group | Capex + R1.5bn on FY22 driven by organic growth and expansionary capex Expansionary Capex: 6,0 7,0% Acquisitions: Tapestry 5,8% 6,0% • Tapestry (169 stores acquired) 6,0% 5,0 Post-Covid • +19 new stores since catch up 5,0% 4,0 Organic: Other 23% 3,7% R2.9bn R3.1bn 4,0% • c.R1.0bn store capex
Slide 20: Group | Cash flow
Group | Cash flow +12.0% in Operating Profit, robust Balance Sheet Net Debt* 1.2x net 7.4x Operating profit +12.0% (ex Tapestry: 7.0%) R7.1bn debt* to EBITDA* to OPERATING Working capital : R3.1bn 10,6 (PY: R1.0bn) EBITDA* interest cover • Organic growth • Debtors’ book conservative growth ( Full di
Slide 21: Segmental Performance: TFG Africa
03 SEGMENTAL PERFORMANCE: TFG AFRICA Bongiwe Ntuli Group CFO 21
Slide 22: TFG Africa | Key metrics
TFG Africa | Key metrics +17.2% turnover growth (+11.2% ex Tapestry), +5.1% LFL despite the severe levels loadshedding in Q4 Impact of loadshedding disruptions & 11,3% Directly influenced • Turnover growth driven by market share gains 43,2% dealing with slow moving stock by margins • Turnover lost c
Slide 23: TFG Africa | Acquisitions
TFG Africa | Acquisitions +9.7% +4.1% +11.1% severely impacted by load shedding +15.1% R’bn R’bn R’m R’m Retail turnover Turnover EBIT Retail turnover Turnover EBIT FY2022 FY2023 FY2022 FY2023 Turnover: EBIT: Stores: Turnover: EBIT: Stores: • R5.6bn (+9.7% on 2022) • c.R560m EBIT in FY2023 • 467 sto
Slide 24: Africa Outlook
Africa Outlook No imminent solution for load shedding, continued pressure on consumer KEY AREAS TACTICAL STRATEGY • Markdown optimization in a heavy promotional environment • Conservative purchases Gross Margin • Continued cost reduction focus • Curtail store growth • ecommerce break-even EBIT Margi
Slide 25: Segmental Performance: TFG Africa Credit
T h e p 03 i c t u r SEGMENTAL e c PERFORMANCE: a n TFG AFRICA CREDIT ’ t b e d Jane Fisher i s Group Director p l a y e d . 25
Slide 26: Credit demand
Credit demand Tightened accept rates to control concentration risk NEW ACCOUNTS VOLUME IN ‘000 KEY PERFORMANCE INDICATORS 4 500 60% Credit Turnover Growth Cash Turnover Growth 4 000 3 500 45% FY 23: +11.0% FY 23: +19.7% 3 000 37% 40% FY 22: +24.2% FY 22: +35.9% 2 500 25% FY 21: -23.6% FY 21: +19.0%
Slide 27: Credit performance
Credit performance R1bn growth in debtors’ book NEW ACCOUNT CONTRIBUTION & BOOK IN R’BN KEY PERFORMANCE INDICATORS Credit Contribution Impairment 20% 10,0 30 31 20% 28 18% FY 23: 27.3% FY 23: 20.0% 18% 16% 9,5 16% FY 22: 28.9% FY 22: 19.1% 13% 14% 9,0 12% FY 21: 30.7% FY 21: 20.7% 10% 8,5 8% 6% Writ
Slide 28: Summary: book growth generates provision growth
Summary Book growth of 12% generates provision growth of 17% +37% BAD INCOME DEBT 83,9 R2.28bn 29,7 (R1.35bn) +7% +5% 249,9 93,6 +31% +24.8 +37% +24.8 32,2 % % 1 349,2 983,8 CREDIT EBIT COSTS R312m (R617m) R’m +6% +24.8 +78% +24.8 Net Bad Debt Increase in Write- Increase in Provision - Book Provisio
Slide 29: Segmental Performance: TFG London
03 SEGMENTAL PERFORMANCE: TFG LONDON Justin Hampshire CEO TFG London Matt Wilson CFO TFG London 29
Slide 30: TFG London | Performance highlights
TFG London | Performance highlights +10.3% EBIT growth, record year Strong Turnover growth – post Covid recovery • +£29.1m (+9.4%), LFL +8.9% EBIT 500,0 margin % 5,2% 3,7% -98,4% Retail 20,0% Turnover Turnover • UK offline channels outperformed achieving LFL 7,8% 7,9% growth of +10.7% 408,3 390,0 40
Slide 31: TFG London | FY2024 Outlook
TFG London | FY2024 Outlook ECONOMIC FOCUS OUTLOOK CHALLENGES AREAS Selling margin pressure 1. Increased supply chain costs, 2. FX risk Trading Gross 3. Promotional environment Margin • Planning for the post pandemic “normalization” of customer behaviour Reset stock buys to normalized levels • Infla
Slide 32: Segmental Performance: TFG Australia
03 SEGMENTAL PERFORMANCE: TFG AUSTRALIA Gary Novis Director TFG Australia Dean Zanapalis CEO TFG Australia 32 32
Slide 33: TFG Australia | Performance highlights
TFG Australia | Performance highlights Record year with sales growth +29.8%, LFL growth +12% Performance: • Post lockdown shopping boom in dressy product 1200,0 584 600 • Maximised market opportunity for profit in FY2023 576 580 554 • Sales grew by 29.8% and EBIT growth was 56.0% 1000,0 534 560 809,
Slide 34: TFG Australia | Outlook
TFG Australia | Outlook ECONOMIC FOCUS OUTLOOK CHALLENGES AREAS • Consumer confidence at • FY23 was an abnormal year driven by a historic lows post pandemic boom in dressy product • Persistent cost of living • Budget for FY24 excludes the record pressures sales achieved in dressy product Trading Gro
Slide 35: Strategy and Outlook
04 STRATEGY AND OUTLOOK Anthony Thunström Group CEO
Slide 36: Capital allocation
Capital allocation Capital allocation aligned to our strategic priorities to Build and Optimise, whilst Sustaining our business and delivering returns to shareholders Organic growth M&A Store expansion Bash Back-up power Supply Chain Acquisitions Dividend resilience FY23 R1bn R225m R200m R360m R2.1b
Slide 37: Management focus: Short to medium term
Management focus : Short to medium term Navigating tough global and local conditions, with focus on improving shareholder value +24.8% +24.8% +24.8% +24.8% TOPLINE GROWTH TIGHTENENING OUR BELT OUTPUT FOCUS ü Strong, resilient ü Margins: ü Leverage to bottom line executive team • Sweating assets ü EB
Slide 38: Trading update: post year-end
Trading update: post year-end Turnover growth TFG Africa TFG London TFG Australia +15.4% Apr/ May YTD -10.8% -4.9% (+5.8% ex Tapestry) TFG Results Presentation – for the year ended 31 March 2023 38
Slide 39: Q&A coffee break
We will resume in 5 minutes for the Q & A session. Enjoy your coffee break… Q&A
Slide 40: Disclaimer
DISCLAIMER 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
Slide 41: Appendix
The picture can’t be displayed. APPENDIX The picture can’t be displa yed. 41
Slide 42: TransUnion Consumer Credit Index Q4 2022
Transunion Consumer Credit Index Q4 2022 Index continues to deteriorate TransUnion. ETM. Macro Advisors. Macrobond TransUnion. ETM. Macro Advisors. Macrobond • Credit health continues to deteriorate - the TransUnion Consumer Credit Index fell to 48 during Q4 of 2022: • Rising debt service costs most
Slide 43: Credit | Additional Information
Credit | Additional Information TFG AFRICA FY23 % change TFG AFRICA FY22 Income (Rm) 2,277.7 30.7% 1,742.9 Net bad debt (Rm) (1,349.2) 37.1% (983.8) Credit costs (Rm) (617.0) 5.6% (584.5) EBIT (Rm) 311.5 78.4% 174.6 Number of applications 4,484,148 58.4% 2,830,773 Accept rates 19.0% 24.9% Number of
Slide 44: Additional Financial Information
ADDITIONAL FINANCIAL INFORMATION 44
Slide 45: Group | Income Statement
Group | Income Statement 2023 2022 % Change Rm Rm Full year Revenue 55,121.3 46,167.4 19.4 Retail turnover 51,778.1 43,370.3 19.4 Gross profit 24,818.5 21,026.8 18.0 Interest income 1,673.8 1,227.0 36.4 Other income 1,669.4 1,570.1 6.3 Net bad debt (1,351.1) (983.8) 37.3 Trading expenses (21,393.9)
Slide 46: TFG Africa | Income Statement
TFG Africa | Income Statement 2023 2022 % Change Rm Rm Full year Revenue 38,804.8 33,072.1 17.3 Retail turnover 35,480.5 30,275.0 17.2 Gross profit 14,542.4 13,079.3 11.2 Interest income 1,654.9 1,227.0 34.9 Other income 1,669.4 1,570.1 6.3 Net bad debt (1,351.1) (983.8) 37.3 Trading expenses (13,11
Slide 47: TFG London | Income Statement
TFG London | Income Statement 2023 2022 % Change 2023 2022 % Change £m £m Full year Rm Rm Full year Revenue 337.7 308.6 9.4 Revenue 6,900.1 6,253.8 10.3 Retail turnover 337.7 308.6 9.4 Retail turnover 6,900.1 6,253.8 10.3 Gross profit 198.2 175.3 13.1 Gross profit 4,049.1 3,552.8 14.0 Trading expens
Slide 48: TFG Australia | Income Statement
TFG Australia | Income Statement 2023 2022 % Change 2023 2022 % Change A$m A$m Full year Rm Rm Full year Revenue 811.5 623.8 30.1 Revenue 9,416.4 6,841.5 37.6 Retail turnover 809.9 623.8 29.8 Retail turnover 9,397.5 6,841.5 37.4 Gross profit 536.6 400.7 33.9 Gross profit 6,227.0 4,394.7 41.7 Trading
Slide 49: Group | Expenses
Group | Expenses 2023 2022 % Change Rm Rm Full year Depreciation 1,058.4 860.6 23.0 Employee costs 9,019.6 7,366.8 22.4 Occupancy costs 5,420.1 4,660.3 16.3 Other operating costs 6,488.2 5,655.2 14.7 Total trading expenses before IFRS16 adjustments 21,986.3 18,542.9 18.6 IFRS16 adjustments (592.4) (
Slide 50: Group | Statement of Financial Position
Group | Statement of Financial Position 2023 2022 % Change 2023 2022 % Change Rm Rm Full year Rm Rm Full year ASSETS EQUITY AND LIABILITIES Equity attributable to equity holders of The Foschini Non-current assets Group Limited 21,652.5 19,137.9 13.1 Property, plant and equipment 5,184.6 3,209.6 61.5
Slide 51: Group | Cash Flow Statement
Group | Cash Flow Statement 2023 2022 2023 2022 Rm Rm Rm Rm Cash flows from operating activities Cash flows from financing activities Operating profit before working capital changes 10,631.6 9,490.6 Shares purchased in terms of share incentive schemes (87.0) (244.4) Increase in working capital (3,52
Slide 52: Our Footprint
OUR FOOTPRINT 52
Slide 53: Global footprint
Global footprint TFG OUTLETS 4 697 COUNTRIES 23 TFG AFRICA OUTLETS TFG LONDON OUTLETS TFG AUSTRALIA OUTLETS 3 524 589 584 CONTRIBUTION TO TURNOVER CONTRIBUTION TO TURNOVER CONTRIBUTION TO TURNOVER 68.5% 13.3% 18.2% TFG Results Presentation – for the year ended 31 53 March 2023
Slide 54: Footprint movement since 1 April 2022
Footprint movement since 1 April 2022 TFG AFRICA TFG LONDON 688,0 21,0 337,0 3087 169,0 -69,0 3524,0 -120,0 589,0 688 Apr 22 3087,0 Apr 22 3 524 589 Mar 23 Mar 23 01 Apr 22 Acquisition New outlets Closed outlets 31 Mar 23 01 Apr 22 New outlets Closed outlets 31 Mar 23 TFG AUSTRALIA GROUP 381,0 4 351
Slide 55: TFG Africa footprint
TFG Africa footprint Country Stores South Africa 3,301 Namibia 101 Zambia 29 Botswana 54 Lesotho 21 Eswatini 18 South Africa Stores Eastern Cape 330 Free State 187 Gauteng 959 KwaZulu-Natal 427 Limpopo 298 Mpumalanga 325 North West 183 Northern Cape 102 Western Cape 490 TFG Results Presentation – fo
Slide 56: TFG London footprint
TFG London footprint Europe Total Stores Concessions UK & Ireland 431 158 273 Switzerland 6 6 0 Germany 30 2 28 Spain 18 0 18 Netherlands 9 2 7 North America Total Stores Concessions USA 29 0 29 Mexico 28 0 28 Asia Total Stores Concessions Hong Kong 14 12 2 Japan 7 0 7 Middle East Total Stores Conce
Slide 57: TFG Australia footprint
TFG Australia footprint Australia Total Stores Concessions Australia 548 509 39 New Zealand 36 36 0 TFG Results Presentation – for the year ended 31 March 2023 57
The Foschini Group Limited (TFG) — FY2023 Earnings Presentation on 6ix