Retail group TFG is unfazed by competition from Chinese outfits Shein and Temu and US e-commerce behemoth Amazon — with group CEO Anthony Thunström bullish on winning further market share in SA after a record 2023 financial year.
The company’s annual results to end-March show it had a winning streak in taking market share from rivals — a performance that saw its revenue breach the R60bn mark for the first time.
The company is not resting on its laurels, however, and is looking for acquisitions in the UK, Australia and SA.
Thunström said the increasing popularity of Shein and Temu would not slow down TFG.
TFG’s fledgling SA e-commerce offering, Bash, reported turnover growth of 44.4% and now contributes 4.2% to retail revenue.
“Shein, Temu and Amazon are all going to compete in SA for market share. We knew they were coming for the past couple of years. That’s why we invested in platforms like Bash, which is by far the number one SA lifestyle and fashion app,” Thunström said.
“We have had more than 3.5-million app downloads in SA in the past 12 months. We are not a discounter online. When competing with the big international guys, you have to produce fashion a lot more quickly.”
The group’s consolidated online sales increased 22% to R5.6bn in the year under review, contributing 9.9% of total turnover.
Shein’s growth in SA, based on low prices, saw local rival Zando in June launch an international e-commerce division called Zando Global. Shein posts goods directly to SA consumers and sells shoes, accessories, clothing and makeup at low prices. Shein and Temu have been successful at undercutting local brick-and-mortar retailers.
TFG’s revenue in the year went up 8.9% to a record R60.1bn, while cash generated from operations surged 76.5% to R12.5bn. It said it used the proceeds to repay debt, pay dividends and fund growth and acquisitions.
The group, worth about R34bn on the JSE, declared a final dividend of 220c per share, up 33% from the prior period.
After the release of the results TFG’s share price shot up the most since June 2020 — when SA began to emerge from the first, pandemic lockdown — and by market close had gained 11.29% to R103.50.
During the year TFG restructured its store portfolio, opening 272 new outlets and revamping about 100 more. It closed 106 unprofitable stores.
Thunström said the company was well poised to steal market share from rivals.
“I am pleased that the group was able to deliver a very strong performance in another challenging year. Through our aggressive growth of revenue, at the expense of our competitors, and the effective management of costs, we have delivered compelling positive operating leverage,” he said.
“In a low-growth environment, this ability to continue to grow at the expense of competitors is critically important and speaks to the strength of TFG’s unique retail ecosystem.”
The group, which has more than 30 brands, beat many of its targets for the year. These included reducing its debt levels from R7.1bn to R4.9bn against a target of R6.4bn.
TFG has been on an acquisition spree, which included the purchase for R2.3bn of Tapestry Home Brands, the owner of furniture stores Coricraft, Volpes, Dial-a-Bed and The Bed Store.
Thunström said the group was looking to make further purchases, saying “we are always looking, it’s in our DNA”.
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