TFG flags up to 85% decline in FY profit
South African retailer TFG flagged an up to 85% decline in full-year profit on Friday, hurt by Covid-19-led lockdowns across its markets.
It also booked an after-tax non-cash impairment of R2.7 billion ($192.4 million) for its London business, which includes the Hobbs and Phase Eight clothing brands.
The clothes, homeware and jewellery retailer said basic headline earnings per share (Heps), the main profit measure in South Africa, for the year ended March 31 is expected to have declined by between 75% and 85%.
The impairment is excluded from Heps.
TFG London was hardest hit of its regions by the lockdowns, with turnover down 45% during the fourth quarter to March, TFG said.
The Phase Eight and Hobbs brands, which mainly serve the occasion wear and formal workwear segments, saw lower demand as people were socialising less and working from home due to the pandemic.
“The pandemic has not only directly impacted trading over the last financial year, but it has also had significant long-term ramifications on TFG London’s department store partners, reducing TFG London’s projected future cash flows,” TFG said.
As a result, it booked a non-cash impairment after re-assessing the carrying values of the goodwill and intangible assets related to TFG London, it said.
The London business had concluded its head office restructuring and closed 230 non-profitable stores and concessions, TFG said.
Group turnover grew by 21% in the fourth quarter to March, TFG said, aided by the contribution of recently acquired budget clothing retailer Jet. Excluding Jet, turnover grew by 6% compared to the same period a year ago.
TFG bought Jet in September from struggling department chain owner Edcon after it filed for business rescue earlier last year.
Read: Why TFG’s Jet deal is the bargain of the century
Sales at TFG Africa, its biggest business, rose by 37.3%, while TFG Australia reported turnover growth of 30.4% in Australian dollar terms, despite intermittent Covid-19 lockdowns and restrictions in different states and regions.
For the 12 months to March 31, total group turnover fell 6.7% compared to the same period in the previous financial year, hurt by lockdowns which prevented the non-essential provider from opening stores. Excluding Jet, sales fell by 13%.
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