South African retailer TFG to boost local clothing production

A shopper walks past a Foschini store in a shopping center in Lenasia, south of Johannesburg, File. REUTERS/Siphiwe Sibeko

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  • TFG returns to operating profit
  • Business takes advantage of pent-up demand
  • Plans new manufacturing units in existing factories
  • Resumes final dividend payment

JOHANNESBURG, June 10 (Reuters) – South African fashion retailer TFG (TFGJ.J) will further expand local clothing production this year to reduce reliance on fragile global supply chains, said the chief executive after the company achieved a full-year operating profit. .

Apparel and footwear retailers around the world are grappling with tight supply lines that have driven up shipping costs and delays, meaning products are taking longer to arrive in stores.

The owner of British womenswear brands Hobbs and Whistles and local clothing label Foschini and Markham has fared better than competitors as it has brought production closer to home over the past five years by expanding its own factories and buying new ones. Read more

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“Our continued development of our capacity and manufacturing capabilities has served TFG really well in a time of unprecedented global supply chain disruption and has significantly reduced risk to our business,” CEO Anthony Thunström told investors.

The company said some of the 10 new manufacturing units will be added to existing factories this year and others will be stand-alone factories. The units, each with between 200 and 400 workers, would be spread across the Cape Town and Durban regions, Thunström told Reuters.

This has allowed the retailer, which also sells high-end furniture, to improve its delivery times, i.e. the time from order to shelf, and to compete effectively with the giants of the fast fashion like Zara from Inditex (ITX.MC).

Its average quick response times are more than 50% lower than other vendors, Thunström said, though he didn’t give a figure for that response time.

TFG posted an operating profit before finance charges of R4.8 billion ($310.91 million) in the year ended March 31, compared with a loss of R719.2 million a year earlier. early as it recovered from COVID-19 restrictions that forced stores to close in its three markets. .

As restrictions eased, consumers refreshed their wardrobes and homes after months at home.

Group revenue rose 29.7% to R46.2 billion, with retail sales growth of 31.6% to R43.4 billion. Online sales increased by 11.7% and contributed 10.2% to the group’s turnover.

TFG, formerly known as The Foschini Group, also resumed annual dividend payments, declaring a final dividend of 330 cents per share.

($1 = R15.4385)

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Reporting by Nqobile Dludla; Editing by Jason Neely and Edmund Blair

Our standards: The Thomson Reuters Trust Principles.

Michael O. Stutler