Retailers get singed

2014-05-30 11:35

A week after African Bank announced billions in losses, mostly blamed on customers not servicing their loans, the Foschini Group’s financials showed bankers were not the only guys to get their fingers burned. Retailers got singed too.

But instead of African Bank’s gobsmacking R4.4bn loss, Foschini – which owns fashion stores of the same name, the @home store and the American Swiss and Sportscene brands – said yesterday it had a R5.8bn debtors’ book from the year to March, with net bad debt making up 12.4%, or R719.2m, of this number.

Dee Sheard, the company secretary, said the debtors’ book was managed internally – indicating the group was directly exposed to any defaulting customers. Credit sales represent more than half of the group’s sales.

Smartly for Foschini, cash has been set aside to cover 12.3% of the debtors’ book, which the board said was “adequate”.

“We expect trading conditions in the credit side of our business to remain challenging, while we anticipate we will continue to benefit from strong cash sales growth,” said chairperson David Nurek and chief executive Doug Murray.

The group’s cash sales grew 15.9% on the previous financial year, and made up 42.2% of total sales.

Foschini will be looking to grow its footprint on the continent, where it currently has 120 stores. These grew turnover by 26%, a nice chunk of change contributing towards Foschini’s overall retail revenue of almost R14.2bn.

Foschini is now planning to increase the number of stores elsewhere in Africa to 300 by 2018.

Sheard denied the plans were an attempt to reduce the group’s exposure to the bad domestic credit market.

“African expansion is a long term strategic objective and definitely not to reduce our exposure to SA,” said Sheard.

“We are looking to expand in territories we already trade in – including Botswana, Namibia, Zambia, Nigeria – as well as planned future expansion to Ghana, Angola, Mozambique and Kenya.”

An online trading platform for customers is also in the works, which the group plans to launch towards the end of this year in phases across its retail brand portfolio.

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