TFG targets $4m capex for Jet, plans to roll out 150 stores

TFG will invest R70 million ($4.4 million) in capital spending in recently bought budget clothing retailer Jet in the short-term, its CEO said on Thursday after the fashion retailer swung to a half-year headline loss.

The capex is mostly for store refurbishments for the first 18 months and thereafter TFG will invest R30 million to R50 million for the next couple of years, TFG CEO Anthony Thunström said.

“Jet has got us in approximately 200 locations where we had zero TFG presence or totally under represented so it has really opened up a whole new market for us and we believe there is a potential rollout for approximately another 150 Jet stores over time,” Thunström added.

TFG bought Jet in September from struggling department chain owner Edcon after it filed for business rescue earlier this year.

TFG, formally known as The Foschini Group, reported a headline loss per share of 91 cents in the six months to September 30, compared to headline earnings per share (HEPS) of 531.2 cents a year earlier, as the coronavirus pandemic forced it to close stores in its major markets. HEPS is the main profit measure in South Africa.

The retailer also blamed the dilution impact of a rights offer as well as the acquisition of certain stores and assets of Jet.

Trade was heavily impacted by significant store closures in April and May, equating to eight weeks in lost turnover, with lockdowns in Britain and Australia impacting sales further, it said.

TFG’s clothing business was the hardest hit by heavy promotional activity in the sector and subdued demand for occasion and formal wear as people were forced to stay and work from home. Cellular and homeware, however, performed strongly, it added.

Group retail turnover fell 26.1% to R12.5 billion, while online sales, which now contribute 14.4% to group retail turnover, for TFG Africa and TFG Australia jumped 116% and 67%, respectively.