THE FOSCHINI GROUP LIMITED RESULTS PRESENTATION FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2015
RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2015 AGENDA − Economy and retail environment Doug Murray − Business overview Doug Murray − Review of the period Doug Murray − Financial review Anthony Thunström − TFG Financial Services Jane Fisher − Phase Eight Doug Murray − Key performance indicators and outlook Doug Murray TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 2 2 1 TFG | SEPTEMBER 2015 RESULTS PRESENTATION
ECONOMY AND RETAIL ENVIRONMENT THE ECONOMY AND RETAIL ENVIRONMENT Global economy remains challenging − Slower global growth expected as a result of weakness in China, Brazil and Russia • Uncertainty regarding US Fed interest rate • Weak commodity demand Domestic economy − Volatile current account deficit − Continued Rand weakness against major currencies − Negative impact of industrial action, load shedding and weak commodity prices on GDP growth − Interest rates • 25 basis point increase during July 2015 • Uncertainty around timing and quantum of future increases − CPI continues at lower levels • 4,6% at end September • Expected to increase for remainder of 2015 and 2016 to 6% but will remain within target range albeit at higher end − GDP growth outlook unchanged at 1,7% for 2015 (BER) • Outlook for 2016 revised downwards to 1,7% from 2,1% (BER) TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 4 2 TFG | SEPTEMBER 2015 RESULTS PRESENTATION
TRADING ENVIRONMENT Source of graphs: BER Economic Snapshot October 2015 TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 5 TRADING ENVIRONMENT Source of graphs: BER Economic Snapshot October 2015 TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 6 3 TFG | SEPTEMBER 2015 RESULTS PRESENTATION
BUSINESS OVERVIEW BUSINESS OVERVIEW − TFG = home of leading retail brands • 20 brands › Primarily own brands – leading household names Addition of SODA Bloc and Colette towards end of 1 st half of 2016 financial year › − Broad product offering across various merchandise categories • Clothing • Jewellery • Homeware & furniture • Cellphones • Cosmetics − Broad LSM appeal from value to upper end TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 8 4 TFG | SEPTEMBER 2015 RESULTS PRESENTATION
TFG FOOTPRINT − 2 913 outlets in 31 countries globally • TFG South Africa 2 226 stores • TFG rest of Africa 164 stores in 7 countries • Phase Eight 523 outlets in 23 countries TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 9 FOOTPRINT (EXCLUDING PHASE EIGHT) Rest Total South of number Brand Africa Africa of stores @home 81 4 85 @homelivingspace 24 2 26 American Swiss 218 20 238 Charles & Keith 13 - 13 Colette 6 - 6 DonnaClaire 97 4 101 Duesouth 45 5 50 Exact 254 15 269 Fabiani 20 - 20 Fashion Express 220 16 236 Foschini 261 21 282 G-Star Raw 8 - 8 Hi 3 - 3 Markham 295 24 319 Mat & May 26 - 26 SODA Bloc 5 - 5 sportscene 215 15 230 Sterns 164 18 182 Totalsports 271 20 291 Total 2 226 164 2 390 TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 10 5 TFG | SEPTEMBER 2015 RESULTS PRESENTATION
FOOTPRINT: REST OF AFRICA − All stores in rest of Africa are corporate stores − Rest of Africa 164 stores in 7 countries • 16 stores opened during the period − 27,1% turnover growth with 9,0% same store turnover growth excluding Namibia • 14,6% turnover growth including Namibia − Namibia impacted by: • Angolan oil-dependent economy slump − Further expansion • Kenya (2016) • Mozambique − Target for 2021: approximately 330 stores TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 11 FOOTPRINT: PHASE EIGHT Stores Concessions Total outlets UK & Ireland Netherlands 108 247 355 - 7 7 Germany Australia 36 38 16 16 2 - Switzerland Belgium 12 28 40 - 6 6 1 1 1 3 - 2 Bahrain Hong Kong 3 3 7 7 Kuwait - Mexico - 1 1 1 1 - - Qatar Malaysia 6 6 4 4 Singapore - USA - 1 8 9 1 - 1 Sweden Norway United Arab 9 9 8 8 - - Saudi Arabia Emirates - 4 4 - 1 1 Italy* Latvia* 2 2 1 1 - - Japan* Estonia* * New countries for 2016 financial year TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 12 6 TFG | SEPTEMBER 2015 RESULTS PRESENTATION
TURNOVER BY MERCHANDISE CATEGORY % change excl % same September September % Phase store Retail turnover by merchandise category 2015 (Rm) 2014 (Rm) change Eight growth Clothing 7 186,0 4 903,2 46,6 12,5 6,6 Jewellery 697,6 656,0 6,3 6,3 2,6 Cellphones 740,5 729,0 1,6 1,6 (2,5) Homeware & furniture 624,9 552,3 13,1 13,1 5,6 Cosmetics 512,2 464,6 10,2 10,2 7,4 Total 9 761,2 7 305,1 33,6 10,8 5,3 Cash sales 5 411,7 3 232,2 67,4 15,8 Credit sales 4 349,5 4 072,9 6,8 6,8 Total 9 761,2 7 305,1 33,6 10,8 − Cash sales • Represent 46,2% (including Phase Eight: 55,4%) of total sales (September 2014: 44,2%) • Strong growth at 15,8% (including Phase Eight: 67,4%) − Credit sales • Improved growth of 6,8% (2015 H1 at 2,5% and 2015 H2 at 6,1%) TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 13 TURNOVER: MERCHANDISE CATEGORY CONTRIBUTION 5,3% 6,4% Cosmetics Homeware & Clothing & footwear furniture - Sport 17,9% 7,6% Cellphones 7,1% Jewellery Clothing & footwear 73,6% - Phase Eight 17,1% Clothing and footwear Clothing & footwear - Value 11,3% Clothing & footwear – Fashion 27,3% TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 14 7 TFG | SEPTEMBER 2015 RESULTS PRESENTATION
CASH VS CREDIT TURNOVER GROWTH EXCLUDING PHASE EIGHT 25.0% 10,8% 9,7% 10,8% 20.0% 20.3% 19.6% GROWTH IN SALES % 15.0% 15.8% 10.0% 6.8% 5.0% 4.3% 2.5% 0.0% FY 2015 Apr 2014 - Sep 2014 Apr 2015 - Sep 2015 (excl Phase Eight) (excl Phase Eight) GROWTH IN CASH SALES GROWTH IN CREDIT SALES TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 15 REVIEW OF THE PERIOD 8 TFG | SEPTEMBER 2015 RESULTS PRESENTATION
REVIEW OF THE PERIOD − Continued strong cash sales growth of 15,8% (67,4% including Phase Eight) − Improved credit turnover growth at 6,8% (September 2014: 2,5%) − Gross margins in all categories maintained • Phase Eight margin boosts overall GP • Merchandise inflation at approximately 7% − Like-for-like expense growth at approximately 5% − 201 new outlets opened • 104 in South Africa • 16 in the rest of Africa • 81 internationally through Phase Eight − Launch of tweens brand SODA Bloc − Launch of Sports’ division online selling − Integration of Phase Eight progressing − Trade receivables’ book continues to be well managed • Improvement in net bad debt growth to 4,4% compared to 9,9% at September 2014 (Sept 2013: 37,6%) • Continued implementation of appropriate credit risk measures • Adequately provisioned − Balance sheet • Additional equity raised through scrip distribution • Optimisation of long term vs short term funding in progress TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 17 SEPTEMBER 2015: SALIENT FEATURES Retail turnover R9,8 bn Retail turnover growth 33,6% Gross margin 49,1% Net bad debt / closing debtors’ book 14,0% ROE 22,5% Debt / equity – recourse 56,2% Debt / equity - total 75,0% TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 18 9 TFG | SEPTEMBER 2015 RESULTS PRESENTATION
SEPTEMBER 2015: SALIENT FEATURES HEPS from continuing operations (cents) 470,2 HEPS from continuing operations - growth 16,6% Interim distribution (cents per share) 306,0 Growth in interim distribution 16,3% TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 19 FINANCIAL REVIEW 10 TFG | SEPTEMBER 2015 RESULTS PRESENTATION
FINANCIAL REVIEW: INCOME STATEMENT HIGHLIGHTS % change September September excl Phase 2015 2014 % change Eight Revenue (Rm) 11 082,6 8 538,3 29,8 10,2 Retail turnover (Rm) 9 761,2 7 305,1 33,6 10,8 Gross margin (%) 49,1 45,4 Trading expenses excl net bad debt (Rm) 4 005,2 2 819,8 42,0 11,6 Net bad debt (Rm) 506,7 485,2 4,4 4,4 Operating margin (%) 16,4 17,1 HEPS from continuing operations (cents) 470,2 403,3 16,6 TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 21 TFG EARNINGS & DISTRIBUTIONS CONTINUING OPERATIONS HEPS growth HEPS growth 500.0 8,0% 16,6% 450.0 470.2 400.0 403.3 350.0 373.6 CENTS 300.0 306.0 250.0 263.0 243.0 200.0 150.0 100.0 50.0 0.0 Sept 2013 Sept 2014 Sept 2015 HEPS DPS TFG | SEPTEMBER 2015 INTERIM RESULTS PRESENTATION 22 11 TFG | SEPTEMBER 2015 RESULTS PRESENTATION
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