Top SA retailer in trouble as hundreds of stores face closure

Johannesburg – The Congress of South African Trade Unions (COSATU) has warned The Foschini Group (TFG) to consider the impact of its planned store closures on workers, as the retailer accelerates a shift towards online shopping.

According to Newsday, COSATU’s intervention follows TFG’s plan to close about 280 stores across Africa over the next three financial years.

The union said TFG had already begun the process, with some closures completed this year, and attributed the move partly to the rapid growth of online retail.

“The fashion retailer has already commenced the process, with closures finalised this year,” COSATU said.

It added that TFG had cited “the surge in the online market surpassing the performance of its physical stores” as one of the reasons for the closures.

TFG said in a September trading update that it had already closed 85 economically unviable African stores in the 21 weeks to 22 August, while opening 25 new outlets. Its African physical-store sales increased only 0.2%, compared with a 54% jump in online sales.

Difficult financial year 

BusinessTech reported that online sales now account for almost 16% of TFG’s total sales, up from about 14% a year earlier.

The retailer has more than 3,400 stores in South Africa and operates brands including Foschini, Sportscene, Markham, Totalsports, American Swiss, Exact and @home.

The planned closures come after a difficult financial period for TFG.

Reuters reported in June that the group’s full-year headline earnings per share fell 33.5%, with the company citing weak sales, excess stock and international challenges.

TFG CEO Anthony Thunström said the group needed to simplify its operations and reduce costs.

“There is a need for us to simplify our structures and structurally reduce our cost of doing business,” Thunström said.

COSATU, however, warned that the closures come at a particularly difficult time for workers, with South Africa grappling with weak economic growth and high unemployment.

“Behind Foschini Group’s popular clothing brands, such as Foschini, Sportscene and Markham, are hard-working individuals,” the union said.

“The business is where it is today largely due to the blood and sweat of its staff.”