TFG CEO discusses full-year results, future plans

The Foschini Group (TFG) has reported record turnover of R46.2 billion along with higher profit margins in their latest annual results. The retailer is now making a significant move to enhance locally sourced products and reduce supply chain disruptions by investing R2.1 billion in new manufacturing businesses. TFG CEO, Anthony Thunström, shared in an interview with CNBC Africa that this investment marks a pivotal moment for the company as they aim to shorten their supply chains and increase speed in responsiveness. Initially starting with a single factory seven years ago, TFG has now expanded to a sizable manufacturing presence in Africa. They are set to open 10 new manufacturing units in the coming year, each expected to employ between 200 and 400 individuals. The locations for these manufacturing facilities will mostly be in South Africa, with acquisitions in regions like KwaZulu-Natal, Durban, and Cape Town. Thunström emphasized that by manufacturing locally, TFG can significantly reduce lead times, leading to lower fashion risk, decreased markdowns, and higher gross margins. The aspect of job creation is also highlighted, with the potential to uplift employment levels in a country facing high unemployment rates. This move not only strengthens TFG's supply chain resilience but also contributes to the economic growth of South Africa. With approximately 72% of products already locally sourced, TFG has been less impacted by global supply chain disruptions compared to those heavily reliant on overseas production. The remaining 28% sourced from abroad has still faced some delays due to pandemic-related bottlenecks, though TFG has managed these challenges well with strategic forward orders. Thunström further discussed the varying consumer environments across TFG's key markets. The Australian consumer market is thriving, benefiting from government support and high levels of employment. In contrast, the UK market is experiencing pressure from factors like rising inflation and energy prices. The South African consumer market, while not displaying significant growth rates overall, has seen TFG shine by gaining market share. Thunström attributed this success to TFG's strategy of maintaining product inflation below market rates for several years. This approach has positioned TFG as a provider of value-for-money products in a challenging economic climate. Thunström also addressed concerns about potential cost pressures and inflation affecting TFG's business. He acknowledged the possibility of price adjustments in response to sustained input inflation but expressed confidence in the company's ability to manage and adapt to such challenges. Looking ahead, TFG is set to open more stores, with plans to launch 350 new outlets. These expansions will primarily focus on growing existing brands and penetrating new market segments. Additionally, TFG's acquisition of Tapestry home brands is nearing completion pending competition commission approval. The integration of Tapestry into TFG's operations is expected to enhance product offerings and further solidify the company's position in the market. Thunström highlighted the goal of transitioning imported home furniture to local production through TFG's manufacturing capabilities. Beyond these developments, TFG is prioritizing the advancement of its omnichannel strategy in South Africa, building on the success of TFG Labs and enhancing online retail metrics. With a clear focus on bolstering local manufacturing, expanding store networks, and strategic acquisitions, TFG is poised for sustained growth and resilience in the ever-evolving retail landscape.