One of Africa’s biggest retail groups is preparing to close more than 100 stores even though its sales are still growing, a sign of how rapidly the economics of retail are changing across the continent’s most developed consumer markets.
TFG, the South African owner of Foschini, Sportscene, Markham, Exact, Jet and @Home, said it has identified about 300 underperforming or loss-making stores and plans to shut more than 100 of them over the next year as part of a broad restructuring programme.
The retailer announced the move alongside annual results that showed headline earnings per share fell 33.5% while operating profit dropped 36% to R3.9 billion ($238 million). Revenue, however, increased 7.2% to R62.4 billion, creating a striking contradiction: more sales, but far less profit.
The company blamed weak consumer spending, operational complexity and deteriorating trading conditions in some of its international markets.
Chief executive Anthony Thunstrom said years of acquisition-led expansion had increased complexity and diluted returns in a difficult retail environment.
