The Foschini Group (JSE:TFG) News - Trading update for Q3 FY2022 and the nine months ended December 2021

THE FOSCHINI GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1937/009504/06
Ordinary share code: TFG
ISIN: ZAE000148466
Preference share code: TFGP
ISIN: ZAE000148516
(“TFG” or “the Company”)

TRADING UPDATE FOR Q3 FY2022 AND THE NINE MONTHS ENDED DECEMBER 2021

SALIENT FEATURES:
  - Strong performance in Q3 FY2022 with Group retail turnover growth
     of 17,3% compared to Q3 FY2021, with significant growth over the
     important Black Friday period (growth of 19,3% in November 2021
     compared to November 2020) and over the festive period (growth of
     19,8% in December 2021 compared to December 2020);
  - TFG Africa delivered strong retail turnover growth of 17,3% in Q3
     2022 compared to Q3 FY2021 (with growth of 13,9% in November 2021
     compared to November 2020, and with December 2021 pleasingly
     exceeding expectation with growth of 23,0% compared to December
     2020);
  - Cash retail turnover growth for TFG Africa of 16,6% for Q3 FY2022
     compared to Q3 FY2021 and 41,6% for the nine months to December
     2021. Cash retail turnover now contributes approximately 70,8% to
     total TFG Africa retail turnover for the nine months to December
     2021;
  - TFG London’s performance continued to improve in Q3 FY2022 with
     retail turnover growth of 25,5% (GBP) compared to Q3 FY2021;
  - TFG Australia’s retail turnover growth of 16,9% (AUD) in Q3 FY2022,
     compared to Q3 FY2021 (and against a Q2 FY2022 decline in retail
     turnover of 16.6% due to severe lockdown measures), showed a strong
     trade rebound as lockdown restrictions were eased in most states by
     November;
  - Group online retail turnover growth of 17,8% for the nine months to
     December 2021 off a very high base in the comparable prior period;
     and
  - Continued investment in growth through organic investments
     (including a further 127 store openings in TFG Africa in Q3 FY2022,
     an increase in manufacturing capacity and strategic IT projects);
     and through acquisitions as previously announced.

OPERATING CONTEXT
The Group continued its strong post-COVID-19 recovery during the third
quarter of FY2022 which was supported by the global vaccine drive and
easing of lockdown restrictions. The majority of the Group’s outlets
delivered strong trading performance as economic activity resumed. In
South Africa, the restrictions were eased to adjusted Level 1 from 1
October 2021. Additional travel restrictions were implemented globally
after the Omicron variant was identified in November 2021 leading to
many foreign visitors cancelling their planned trips to South Africa and
abroad. In Australia, the vaccination rate has reached almost 90% which
has led to the easing of restrictions by most state governments. In
respect of New South Wales and Victoria, the two most significant states
in Australia, stores reopened on 11 October 2021 and 30 October 2021
respectively.

As previously announced on the JSE Stock Exchange News Service (‘SENS’),
198 South African stores were looted and damaged to varying degrees by
the civil unrest experienced in the KwaZulu-Natal province and parts of
the Gauteng province. The Group reopened 166 of these stores by the end
of December 2021 with a further 6 stores planned to reopen by March
2022. The remainder of the stores will only reopen from April 2022
onwards due to the extensive structural damage caused.

Despite the continued challenging trading environment, the Group
continued to invest in growth opportunities. As announced on SENS on 2
December 2021, the Group acquired Quench (Pty) Ltd (‘Quench’), a
digital, on-demand shopping platform and last mile delivery provider.
The addition of Quench to TFG’s existing portfolio of brands will
further position TFG as the leading omni-channel retailer in Africa.

TFG AFRICA UPDATE
TFG Africa’s retail turnover grew by 17,3% during Q3 FY2022 compared to
the same period in the previous financial year. This is a pleasing
performance and indicative of the continued post-COVID-19 recovery of
the business. Festive period retail turnover exceeded expectations with
strong customer demand for the Group’s products. All merchandise
categories grew retail turnover compared to the same quarter in the
previous financial year, except for the most discretionary category,
cosmetics, and cellphones, largely due to international supply chain
disruptions. Pleasingly, the Group’s localized clothing supply chain and
sourcing model provided effective insulation against international
supply chain disruptions in this important category.

TFG Africa’s like-for-like retail turnover growth has been particularly
encouraging with growth of 5,5% in November and 11,2% in December.
November retail turnover was supported by a robust Black Friday (c.R422m
this financial year compared to c.R341m in the previous financial year)
while the week before Christmas delivered c.R380m more retail turnover
than in the previous financial year.

The growth / (decline) in TFG Africa’s retail turnover compared to the
same period in the previous financial year in the respective merchandise
categories was as follows:

                                                             Contribu
                                                              tion to
                                                                  TFG
                                                               Africa
                                                               retail
                                                      Nine   turnover
                  Q1                  H1            months    for the
               April   Q2 July     April   Q3 Oct    April   9 months
Merchandis   to June   to Sept   to Sept   to Dec   to Dec   April to
e category      2021      2021      2021     2021     2021   Dec 2021
Clothing      124,7%     37,2%     72,2%    20,5%    43,7%      76,1%
Homeware       65,4%     19,5%     38,5%    26,4%    32,9%       7,2%
Cosmetics      80,5%     -7,5%     23,5%    -4,7%     9,2%       3,1%
Jewellery     198,4%      2,6%     49,0%     7,6%    26,7%       4,7%
Cellphones     40,6%      8,3%     22,5%    -1,9%    12,2%       8,9%
Total TFG
Africa        107,6%     28,0%     59,5%    17,3%    37,2%     100,0%

Cash retail turnover for Q3 FY2022 grew by 16,6% compared to the same
period in the previous financial year and by 41,6% for the nine months
ended December 2021. Cash retail turnover contributed 70,8% to total TFG
Africa retail turnover for the nine months to December 2021.

As average approval rates for new accounts have normalised, credit
retail turnover for Q3 FY2022 grew by 19,2% compared to the same period
in the previous financial year. For the nine months to December 2021 the
growth in credit retail turnover was 27,8% (behind the growth in cash
retail turnover) as overall credit retail turnover continues to be
purposely restricted by stringent acceptance criteria in line with the
prevailing economic conditions.

Online retail turnover for Q3 FY2022 grew by 23,6% compared to the same
quarter in FY2021. Online retail turnover contributed 3,2% to total TFG
Africa retail turnover for Q3 FY2022 (Q3 FY2021: 3,6%).

TFG AUSTRALIA UPDATE
TFG Australia continued to see strong retail turnover growth as multiple
state governments across Australia relaxed COVID-19 restrictions to
allow greater freedom of movement for citizens by November 2021.

Retail turnover growth for Q3 FY2022 was strong at 16,9% (AUD), with
online retail turnover growth of 43,1% (AUD) compared to the same
quarter in the previous financial year. Driving the Q3 FY2022 retail
turnover growth was a record retail turnover performance in November
with this trend continuing into the festive period.

For the nine months to December 2021, online retail turnover contributed
9,9% to total TFG Australia retail turnover.

The growth / (decline) in TFG Australia’s retail turnover compared to
the same period in the previous financial year was as follows:

                                                                 Nine
                 Q1 April   Q2 July   H1 April     Q3 Oct      months
                  to June   to Sept    to Sept     to Dec    April to
                     2021      2021       2021       2021    Dec 2021
Retail
turnover
movement (%) –
AUD
denominated        130,5%    -16,6%      39,2%      16,9%       28,7%

TFG LONDON UPDATE
TFG London’s performance continued to improve with customer demand for
key categories starting to recover, but the recovery was dampened in
December when the UK government announced a move to ‘Plan B’ measures to
help slow the spread of the Omicron variant.

The growth in TFG London’s retail turnover compared to the same period
in the previous financial year was as follows:

                                                              Nine
                 Q1 April   Q2 July   H1 April   Q3 Oct     months
                  to June   to Sept    to Sept   to Dec   April to
                     2021      2021       2021     2021   Dec 2021
Retail
turnover
movement (%) –
GBP
denominated        103,6%     41,8%      65,6%    25,5%      48,2%

In-store retail turnover performed well and grew by 53,7% in Q3 FY2022
when compared to the same quarter in the previous financial year.

Online retail turnover from TFG London’s own sites grew 5,5% in Q3
FY2022 off a high base during the same quarter in FY2021, while retail
turnover from third party online channels declined by 4,3%. In total,
the contribution of online retail turnover for the quarter was at 43,8%
(Q3 FY2021: 54,1%).

GROUP PERFORMANCE UPDATE
Overall, the Group delivered a strong performance during Q3 FY2022 with
Group retail turnover growth of 17,3% compared to the same period in the
previous financial year with all divisions delivering high double-digit
turnover growth. Group cash retail turnover for Q3 FY2022 grew by 16,8%,
contributing 79,4% to total retail turnover for the three-month period.
Group credit retail turnover grew by 19,2% during Q3 FY2022 when
compared to the same quarter in the previous financial year. Online
retail turnover for the Group grew by 10,3% (TFG Africa: 23,6%) for Q3
FY2022 compared to the same period in the previous financial year.

For the nine months to December 2021, total Group retail turnover grew
by 37,3% compared to the same period in the previous financial year
supported by the easing of lockdown restrictions and subsequent increase
in consumer activity. Group cash retail turnover grew by 40,0% compared
to the same period in the previous financial year, contributing 79,2%
(comparable prior period: 77,7%) to total Group retail turnover for the
nine months to December 2021.

Group online retail turnover grew by 17,8% for the nine-month period,
contributing 9,9% (comparable prior period: 11,5%) to total Group retail
turnover.

OUTLOOK
Although the trading environment across all three our main territories
is expected to remain challenging, we are encouraged by the trading
performance in Q3 FY2022. This level of performance has continued in the
first few weeks of January 2022 and has led, amongst other key
categories, to record retail turnover in the kidswear and school
clothing categories for TFG Africa, largely due to Jet’s first
meaningful contribution to these categories.

The Group remains very well positioned to benefit from the continued
post-COVID-19 recovery and growth in all territories in which we
operate.

We remain committed to the prioritisation of our strategic investments
in technology, local sourcing, store expansion and brands. We are
confident with the strength of our balance sheet which enables us to
capitalise on organic and inorganic growth opportunities and we will
continue with our strong focus on expense control, working capital
management and focused capital allocation.

Shareholders are advised that this trading update has not been reviewed
or reported on by the Company's external auditors.

Cape Town
21 January 2022

Sponsor:
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Date: 21-01-2022 07:05:00
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