The Foschini Group Limited

Reported turnover increased 12.7% to ZAR 29.2 billion. Gross profit rose 12% to ZAR 14.4 billion. EBIT declined 9.9% to ZAR 2.3 billion. Headline earnings per share contracted 21% to ZAR 2.926 per share. Return on capital employed fell to 13.4% from 14.1%, and the interim dividend declined 19% to ZAR 1.30 per share. Segmentally, TFG Africa sales grew 5% with gross margin down 90 basis points and EBIT down just short of 10%; TFG London sales were up 69% in base currency, or 0.7% excluding White Stuff, with EBIT up 9% to GBP 12 million; TFG Australia sales were down 0.5% in dollar terms with EBIT down 18% to $31 million. Cash generated from operations was ZAR 4.7 billion, net debt was ZAR 10 billion, and net debt-to-EBITDA was 1.5x. For the outlook, management said Africa gross margin should not face the same H1 pressure if the market holds, but it would be difficult to recover the full H1 profit contraction; London remains uncertain; Australia is still challenged; and the company said it would wait until the new year before considering more buybacks.

Anthony Thunström emphasized that the first half was unusually difficult because consumer demand stayed weak and highly erratic, especially in South Africa, with spending shifting around paydays and softening sharply late in months. He framed the margin hit as a market-wide issue and said TFG maintained market share in apparel and home categories, while highlighting long-term growth work in beauty, JD Sports, Jet, Volpes, VAS, and omnichannel. His tone was cautious but constructive: near-term trading remains hard to read, yet management said it is still focused on restoring earnings momentum and investing in initiatives that should compound over time.

Ralph Buddle led with the numbers: turnover up 12.7% to ZAR 29.2 billion, gross profit up 12% to ZAR 14.4 billion, EBIT down 9.9% to ZAR 2.3 billion, and HEPS down 21% to ZAR 2.926. He highlighted return on capital employed of 13.4%, operating cash generation of ZAR 4.7 billion, net debt of ZAR 10 billion, and leverage of 1.5x EBITDA, noting the balance sheet also reflected the GBP 50 million White Stuff acquisition and the ZAR 1 billion share buyback. He said Africa’s margin pressure came from sales growth running below cost inflation, Australia and the UK faced ongoing inflationary pressure, and the group was pushing harder on cost control, inventory discipline and capex prioritization.

Analysts focused on whether TFG could get margin relief, how much top-line growth is needed to offset cost pressure, and whether more buybacks are possible. Management said roughly 7% top-line growth is needed to avoid margin pressure given cost growth, and that share buybacks would likely be revisited in the new year after peak-season debt levels normalize. Other key questions covered menswear weakness, with management saying that category tends to outperform when there is more money in the market and underperforms when consumers trade down or seek deeper discounts, and whether JD Sports would cannibalize Sportscene, which management said has been better than expected with near-zero cannibalization aside from one store during renovation.