TFG is buying Tapestry Home Brands — owner of furniture stores Coricraft, Volpes, Dial-a-Bed and The Bed Store — for R2.3bn, allowing it to expand its substantial local manufacturing capabilities and produce furniture and mattresses.
TFG, which owns more than 30 brands including Markham, Sterns and @home, will not need to raise debt for the purchase of Tapestry, which has 175 stores in SA, Namibia and Botswana. It also has manufacturing facilities in Cape Town, Johannesburg and Gqeberha.
The purchase from Westbrooke Investments is still subject to approval from competition authorities.
TFG said: “Tapestry’s unique business model, with easily scalable local manufacturing and distribution capabilities, is an excellent strategic fit for TFG.”
Tapestry makes about 47% of products locally, and its furniture segment is dominated by local goods, putting it in line with TFG’s strategy.
TFG has pursued a strategy of local manufacture for years, making about 72% of clothing for all its brands in SA, from Totalsports to Exact, with the process allowing speed to market and a quicker response to fashion trends. In 2021, TFG bought bedding store Granny Goose and its duvet factory as part of its localisation drive, as well as clothing factory House of Monatic.
TFG CEO Anthony Thunström told Business Day Coricraft’s local manufacturing abilities attracted TFG. “There are very few scalable local furniture manufacturers in SA.”
He said Coricraft was unique in being able to produce custom-made individually styled lounge suites for SA consumers within five weeks.
“If you’re not manufacturing furniture locally, it’s pretty much coming from the Far East. This means very long lead times, with prohibitive shipping costs because you are shipping big, bulky items. Over the past 12 months, shipping rates have increased at least ten-fold.”
He would not comment on media reports that Pepkor, owner of Rochester and Ackermans, had also bid for the Tapestry group, saying it was a professional, private sales process.
However, Thunström said he did not think TFG was the highest bidder. Yet it was still successful because Tapestry management were satisfied with TFG’s strategy for the company.
“I do know that the Tapestry management team were very much in favour of being part of TFG. Anybody joining TFG knows that homeware and furniture are going to be important and get fair attention within the group.”
Following the acquisition, TFG Home Division will have nine Home brands which include @home, @homelivingspace, Jet Home, Coricraft, Volpes, Dial-a-Bed, The Bed Store, Granny Goose, and Biggie Best, and four vertically integrated factories that make mattresses, upholstered furniture, household textiles, duvets and pillows.
When TFG bought discount clothing seller Jet from Edcon’s business rescue practitioners for about R400m, it was also not the highest-paying bidder despite closing the deal.
TFG plans to invest in increasing the number of stores and enabling curtain brand Volpes to sell on credit to TFG account customers. It wants to improve online sales, through its existing e-commerce sites and increase Coricraft's furniture production capacity.
Tapestry management liked the fact TFG runs its businesses and brands autonomously, allowing managers to get on with the day-to-day details of running a business, said Thunström.
“If you’re an entrepreneurial high performance management team, the last thing you’re going to want is somebody micromanaging you.”
He said the Cape Town Coricraft factory was at capacity and TFG would invest R25m in new laser cutting equipment and add additional shifts to increase output.
As supply chain delays and shipping costs became significant during the pandemic, clothing firms such as Woolworths and Truworths increased their investment in local manufacture, even as the textile industry has all but collapsed in recent years due to competition from the Far East.
TFG owns factories in Caledon and in Maitland that produce clothing in an average of 50 days.
If stores need to import clothes, buyers would need to predict fashion trends six months ahead and if they guess incorrectly, stores are left with stock they find difficult to sell.
Asked about buying a furniture business at a time that cash-strapped consumers are facing rising food and petrol costs due to war in Ukraine, Thunström said: “We tend to try to look at the longer term as far as possible.”
TFG’s share price closed 3.21% lower to R121.96, giving it a market capitalisation of R39.32bn.
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