TFG profit falls as weak trading and brand write-downs take toll

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Foschini and Sportscene owner TFG has reported a steep decline in earnings for its 2026 financial year as weaker trading conditions across its major markets and write-downs of brands in the UK and Australia weighed on performance.The retailer’s headline earnings per share for the year to end-March fell 33.5% to 675.4c, while operating profit before brand impairments and acquisition costs dropped 22.1%.TFG said trading conditions worsened during the second half of the year in South Africa, the UK and Australia.“Group performance was adversely affected by a weaker second half as trading conditions deteriorated across all operating regions. The impact of softer peak season demand and lower gross margins resulted in negative operating leverage,” it said. TFG recognised non-cash impairment charges against the Phase Eight brand in the UK and the Tarocash and yd. brands in Australia after revising the long-term cash flow expectations for those businesses.Despite the pressure on earnings, group revenue increased 7.2% and sales rose 7.1% during the year. Excluding White Stuff, sales growth was 2.8%.Its home market, South Africa, remained the group’s biggest contributor, accounting for 68.3% of group sales. TFG Africa grew sales by 5% and increased market share in womenswear by 50 basis points and in homeware and furniture by 40 basis points, according to Retail Liaison Committee data, it said.The group’s online business continued to expand, with online sales rising 31.7% and contributing 14.8% of total retail sales. At home, online sales grew 49.2%, supported by the Bash platform.However, margins were pressured. Group gross margin declined by 120 basis points, while TFG Africa’s gross margin fell 100 basis points to 41.6%.In the UK, sales increased 29.4%, largely supported by White Stuff. Excluding the acquisition, sales were flat as difficult retail conditions persisted. Australia remained under pressure, with sales declining 1.5% amid weak consumer demand and increased promotional activity across the sector.The weaker earnings also affected shareholder returns. TFG declared a final shareholder payout of 140c per share, down 39.1% from 230c in the previous year.The retailer opened 233 stores and closed 242 during the year, ending March with 4,914 stores across 18 countries.The group said consumer spending is under pressure in all three markets. For the first nine weeks of the new financial year, sales grew 2.2% in TFG Africa and 1.7% in TFG London, while TFG Australia recorded a 2.3% decline. The group said gross margins in all three territories have started the new financial year about 100 basis points higher.Business Day