South African retailer TFG to boost local garment production (updated)

China Cultural Tourism and Agriculture

10/06/2022 08:38

* TFG swings to operating profit
    * Company benefits from pent up demand
    * Plans new manufacturing units in existing plants
    * Resumes final dividend payout

 (Recasts with new manufacturing facilities)
    By Nqobile Dludla
    JOHANNESBURG, June 10 (Reuters) - South African fashion
retailer TFG  TFGJ.J  will further expand local garment
production this year to reduce reliance on shaky global supply
chains, the chief executive said after the company swung to a
full-year operating profit.
    Clothing and shoe retailers globally are grappling with
strained supply lines that have driven up shipping costs and
times, which means products take longer to arrive in shops.
    The owner of British womenswear brands Hobbs and Whistles
and the local Foschini and Markham clothing brand has fared
better than competitors as it has brought production closer to
home in the past five years by expanding its own factories and
buying new ones.  urn:newsml:reuters.com:*:nL1N2S20CV  urn:newsml:reuters.com:*:nL8N2SA0EG
    "Our continued build out of our manufacturing capacity and
capabilities has really served TFG well at a time of
unprecedented global supply chain disruptions and significantly
de-risked our business," CEO Anthony Thunström told investors.
    The company said some of the 10 new manufacturing units
would be added this year to existing factories and others would
be standalone plants. 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 lead times, which refers to the time
from order to hitting the shelves, and compete effectively with
fast fashion giants like Inditex's  ITX.MC  Zara.
    Its average quick response lead times are more than 50%
lower than other suppliers, Thunström said, although he did not
give a figure for that response time.
    TFG swung to an operating profit before finance costs of 4.8
billion rand ($310.91 million) in the year ended March 31 versus
a loss of 719.2 million rand a year earlier, as it recovered
from COVID-19 restrictions which forced store closures across
its three markets.
    As restrictions have eased, consumers have refreshed their
wardrobes and homes after months stuck at home.
    Group revenue grew 29.7% to 46.2 billion rand, with retail
turnover growth of 31.6% at 43.4 billion rand. Online sales grew
11.7% and contributing 10.2% to group retail turnover.
    TFG, formally known as The Foschini Group, also resumed
annual dividend payouts, declaring a final dividend of 330 cents
per share.

    ($1 = 15.4385 rand)

 (Reporting by Nqobile Dludla; Editing by Jason Neely and Edmund
Blair)
 ((nqobile.dludla@thomsonreuters.com; +27103461066;))