Retail giant to shut more than 100 stores

By Palesa Matlala

• TFG says weak consumer spending, poor overseas sales and excess stock pushed profits down by 33.5% in the past year.

• The retailer has identified about 300 struggling stores and plans to shut more than 100 as part of a major cost-cutting drive.

South African retail giant TFG is cutting costs after its profits dropped sharply.

The company owns well-known brands including Foschini, Markham, Sportscene, Exact, TotalSports and Jet.

TFG says it will slow down opening new stores, cut spending and close shops that are not making enough money.

The company reported a 33.5% drop in annual profits.

It said shoppers are spending less because many households are under financial pressure.

TFG also said its businesses in the United Kingdom and Australia performed badly in the second half of the year.

Festive season sales were weaker than expected, leaving the company with too much stock.

That stock had to be sold at lower prices, which hurt profits.

Chief Executive Officer Anthony Thunstrom said TFG had grown quickly through buying other businesses, but the weak economy has made the group too complex and costly to run.

“There is a need for us to simplify our structures and structurally reduce our cost of doing business,” he said.

TFG has identified about 300 stores that are underperforming or losing money.

More than 100 of those stores are expected to close over the next year.

The company has not yet said which stores or brands will be affected.

TFG will also spend less on new stores and major projects.

It plans to focus more on online sales through its Bash platform.

The company has already cut R300-million in planned spending in Africa and reduced costs in Australia and the United Kingdom.

It also cut capital spending by more than R600-million.

Despite the profit drop, TFG’s revenue rose by 7.2% to R62.4-billion.

But higher costs and discounted stock hit the business hard.

Operating profit fell by 36% to R3.9-billion.

TFG says the cost cuts are needed to help the business recover while customers continue to struggle with rising living costs.

Pictured above: TFG plans to close more than 100 stores as the retail giant cuts costs after a sharp drop in profits.

Image source: TFG