SA’s fashion retailers are proving resilient in the face of intensifying competition from Chinese e-commerce giants Shein and Temu.
Despite the increasing popularity of these platforms, local players such as Mr Price, TFG and Truworths have used strategic advantages and regulatory changes to defend their market share and boost profitability.
Leading the pack is Mr Price with a 76% surge in its valuation over the past year. TFG follows, up 56%, while Truworths, though lagging behind its rivals, is still up a respectable 35%.
The performances of these retailers underlines the effectiveness of their business models amid economic uncertainty. With stabilising inflation, improving disposable income, and regulatory support, local players appear to be solidifying their positions in the bullish e-commerce market.
Mr Price emerged as the standout performer, buoyed by a 5.2% rise in revenue to R17.6bn for the half-year to end-September 2024. The group’s gross profit margin expanded by 110 basis points to 39.7%, while market share increased 60 basis points. Diluted headline earnings per share (HEPS) grew 6.5% to 468c and an interim dividend of 303.6c per share was declared, reflecting a 7.1% increase.
Despite a 1.4% decline in overall group revenue, TFG recorded a 2.5% increase in gross profit to R12.8bn, thanks to a focused margin management strategy. SA’s Bash platform was a bright spot, with online sales soaring 47.9%.
Operating profit before finance costs fell 3.4% to R2.5bn, while finance costs remained stable at R900m. Basic earnings per share and HEPS decreased 4.8% and 5.6%, respectively. Yet, TFG declared an interim dividend of 160c per share, up 6.7% from the previous year.
While Truworths managed a 3.9% increase in merchandise sales to R20.7bn for the year to end-June 2024, financial pressure on consumers weighed heavily on its profitability. HEPS fell 6.3%, and dividend payouts dropped by 6.4%.
One of the factors contributing to the competitive advantage of local retailers has been regulatory changes introduced by the SA Revenue Service.
Since July 2024, imports from Shein and Temu have been subjected to stricter tax regulations, including the removal of the de minimis rule that previously exempted low-value imports from customs duties.
All orders are now subject to import tax and VAT, effectively narrowing the price gap between international platforms and local retailers. These measures aim to protect SA industries, create a level playing field, and generate revenue for the economy.
SA’s retail sector is poised for growth in 2025, bolstered by stabilising inflation, potential interest rate cuts, and progress in addressing Eskom’s energy challenges.
The e-commerce market, in particular, is expected to grow significantly, with revenues projected to reach $7.52bn (R141.7bn) in 2025. Against this backdrop, local fashion retailers are well-positioned to capitalise on these favourable conditions.
As the local retail environment evolves, these players are not just surviving — they are thriving. The question now is how long can they sustain this momentum as global competitors regroup and adapt.
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