By Nqobile Dludla
JOHANNESBURG (Reuters) -South Africa’s TFG is optimistic about trading ahead of Black Friday and Christmas but wary of the impact of power cuts, its CEO said on Friday after the fashion retailer posted a 15.3%in half-year earnings.
Retailers also face cost of living pressures as interest rates remain high and inflation continues to hit consumers’ wallets.
“On balance, we’re relatively optimistic. We’ve got the stock that we need, stores are ready, so it really comes down to can we trade and again you have to measure it against a very high base,” CEO Anthony Thunström told Reuters.
Regarding South Africa’s rolling power cuts he said if the frequency and duration of blackouts remain low, “it’ll be a great benefit for November and December particularly”.
TFG, owner of the Foschini and Markham clothing stores, last year had records results over Black Friday and Cyber Monday with turnover exceeding 1 billion rand ($53.41 million) over the two days.
For the first half it posted headline earnings per share of 393.6 cents, down from 464.6 cents a year earlier.
The retailer, which also sells furniture, said it expects customers to continue to seek value, which could drive further promotional activity in the industry.
Still, TFG expects retail turnover growth in the second half to be higher than last year, with gross margins in its Africa business expected to improve.
TFG Africa’s gross margins fell by 2.5 percentage points to 39.5% in the first half ended Sept.30, as blackouts resulted in 287,000 lost trading hours, leaving TFG with high inventory it had to clear through promotions.
Its Africa business still managed to grow retail turnover by 17.3%, while performance in its London and Australia businesses normalised after demand built up during the COVID-19 pandemic.
Overall group retail turnover grew by 12.4% to 26.4 billion rand ($1.41 billion).
($1 = 18.7222 rand)
(Reporting by Nqobile Dludla; Editing by Sharon Singleton)