2021 A COMMON THREAD CONNECTS US - TFG Limited
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A COMMON
THREAD
CONNECTS US
2021
INTEGRATED ANNUAL REPORT
THE FOSCHINI GROUP LIMITED
CONTENTS
About our report 02
Who we are 07
Our value creation positioning 35
Value creation through proven strategy 57
Value created through performance 85
Governance appendices 107
Other appendices 159
Company information and shareholders’ calendar 180
INTEGRATED ANNUAL REPORT 2021 1
About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
ABOUT OUR REPORT
Financial reporting
The Foschini Group Limited presents its 2021 integrated annual report This report includes transactions and related events for
all subsidiaries over which The Foschini Group Limited
against the backdrop of a year dominated by the COVID-19 global pandemic. has control and significant influence. These subsidiaries
are split into three segments:
SCOPE AND COMPARABILITY MATERIALITY This refers to all our operations on the African
The 2021 integrated annual report of The Foschini Group This report focuses on matters that have a material REPORTING BOUNDARY continent, through 21 established brands. The
Limited and its subsidiaries (collectively referred to as “TFG” impact on TFG’s ability to create sustainable value and FOR THE INTEGRATED TFG Africa business segment is managed from the
or “the Group”) covers the financial year from 1 April 2020 to outlines how these matters impact our business strategy,
ANNUAL REPORT TFG Group's head office in Cape Town, South Africa.
31 March 2021. Data presented in this report applies to the risks and opportunities, while considering stakeholder AFRICA While information is provided on all three business
Group, unless specifically indicated otherwise. Significant perspectives. Matters were identified using the Enterprise The report includes risks and opportunities that
events after year-end up to the Supervisory Board Risk Framework and apply to the Group, albeit with significantly affect the Group’s ability to sustain segments, prominence is given to TFG Africa as it
approval date of 27 July 2021 have also been included. different levels of likelihood and impact. value for its stakeholders over the short, medium accounts for 69% of the Group's turnover.
and long term.
Data relating to financial, economic, social and Read more about our process and relevant matters
environmental indicators remains broadly comparable This refers to the consolidated performance
on page 80.
to and consistent with our 2020 report. However, the Reporting frameworks of the Phase Eight, Whistles and Hobbs brands.
following should be considered when assessing TFG’s This report is presented in accordance with TFG The TFG London business segment is managed
performance and future prospects as they may affect the FORWARD-LOOKING STATEMENTS the requirements of the King IV Report on LONDON by the local management team based in London,
comparability of financial and non-financial information. This report contains certain forward-looking statements Corporate GovernanceTM for South Africa, United Kingdom (UK).
regarding the results and business activities of TFG, which by
2016 (King IV)1; the Companies Act of South Africa,
In March 2020, the World Health Organisation formally their nature involve risk and uncertainty because they relate
No. 71 of 2008, as amended; the JSE Limited
recognised COVID-19 as a pandemic. Governments around to events and depend on circumstances that may or may
the world have taken various actions to try and curb the not occur in the future. Various factors could lead to actual (JSE) Listings Requirements and the International This refers to the consolidated performance of
pandemic, including the temporary closure of businesses, results or business activities that differ materially from those Integrated Reporting Council's Framework. the Connor, Johnny Bigg, Rockwear, Tarocash
restriction on movement between geographical locations, implied by these forward-looking statements. Accordingly, and yd. brands, collectively Retail Apparel Group
TFG
social distancing and limits on any public gatherings. The these forward-looking statements have not been reviewed (RAG). The TFG Australia business segment is
AUSTRALIA
global economy has experienced major contraction and or reported on by the Group’s external auditors. managed by the local management team based
there remains significant uncertainty regarding the extent in Sydney, Australia.
and duration of the pandemic. All three of the Group’s FEEDBACK
main territories were impacted by restrictions that were We value your feedback as we endeavour to provide
implemented as well as the extent of regulations imposed. accurate, transparent and balanced information to
our stakeholders. Comments and requests for printed
This report presents a balanced view of how COVID-19 copies of this report can be addressed to the Company OUR REPORTING SUITE
impacted not only our performance during the past year, Secretary, whose contact details are on page 180. This report is a concise communication, supplemented by further reporting elements and information available on
but also influenced our strategy and business model going Should you elect to receive regular investor-related
forward. Throughout the report, the impact of and our our investor centre (www.tfglimited.co.za). In conjunction with our integrated annual report, these reports provide a
electronic communication from TFG, kindly provide comprehensive view of TFG’s performance. Non-financial information provided in this report was not assured externally,
response to COVID-19 is discussed in various sections. your email address by emailing our Investor Relations
other than indicated below:
department at investor_relations@tfg.co.za.
In unprecedented trading conditions, the impact was
felt by our employees, customers and business partners Financial Governance Environmental and
alike. We thank all frontline workers for their dedication reporting reporting social reporting
and sacrifice in fighting the pandemic, and remember
the 13 TFG employees who tragically lost their lives.
Target audience: shareholders, Target audience: Target audience:
investment community and analysts All stakeholders All stakeholders
External External External
assurance assurance assurance
Reporting status and Reporting status and Reporting status and
element provider element provider element provider
Annual financial Audited by TFG corporate No external TFG No external
statements Deloitte & Touche governance and assurance sustainability assurance
(see external audit Supervisory Board overview report
report) Committee reports
Results Reviewed by King IV register No external B-BBEE Assured by Mazars
announcement Deloitte & Touche assurance credentials Consulting Services
and scorecard Proprietary Limited
Results No external Notice of annual No external
presentation assurance general meeting assurance
1
Copyright and trademarks are owned by the Institute of Directors in South Africa NPC and all of its rights are reserved.
2 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 3
About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
SUPERVISORY BOARD APPROVAL
The Supervisory Board acknowledges its responsibility for ensuring the integrity of the integrated annual report and
collectively reviewed and assessed the content thereof. The Supervisory Board believes that the integrated annual report:
• has been prepared in accordance with the Framework;
• presents the material matters that impact the Group in a balanced way;
• is a fair representation of TFG’s integrated performance and future prospects; and
• adequately presents TFG’s strategy, and how it enables the Group to create value, in a sustainable manner, in the short,
medium and long term.
F
urther information on the procedures, controls and responsibilities related to the preparation of the integrated
annual report is provided on page 41.
The Supervisory Board approved the 2021 integrated annual report
on 27 July 2021.
M Lewis A E Thunström
Chairman Chief Executive Officer (CEO)
G H Davin B Ntuli
Lead Independent Non-Executive Director Chief Financial Officer (CFO)
Prof. F Abrahams S E Abrahams
Independent non-executive director Independent non-executive director
C Coleman D Friedland
Independent non-executive director Independent non-executive director
B L M Makgabo-Fiskerstrand E Oblowitz
Independent non-executive director Independent non-executive director
N V Simamane R Stein
Independent non-executive director Independent non-executive director
A D Murray
Non-executive director
Disclaimer
Images in this report showing people not wearing masks were either taken prior to COVID-19 or in a safe environment.
4 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 5
About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
02
WHO WE
ARE
This is TFG 08
How we sustain value 10
An overview of our strategy 14
Our brands 16
Our footprint 18
Our timeline 20
Our stakeholders 22
Our people 28
6 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 7
About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
THIS IS TFG
A FOCUS ON 34 891 SPECIALIST IN-HOUSE
CAPABILITIES FOR
A common thread of teamwork, customer focus, continued innovation EMPLOYMENT EQUITY AND EMPLOYEES WITH
MARKET-LEADING
18+
SKILLS DEVELOPMENT
and growth connects TFG to our stakeholders, so that we can make a STORE DESIGN
TO PROMOTE DIVERSITY
real contribution to their lives. Enabled by the Group’s strategic focus AND INCLUSION YEARS AVERAGE AND UPGRADES, FASHION
FASHION RETAIL EXPERIENCE DESIGN AND MANUFACTURING
areas and capital investments undertaken in recent years, we empower AMONG EXECUTIVE MANAGEMENT
and develop employees, support South Africa’s economy through job
creation and local manufacturing and serve our customers in store and
through digital channels. OUR CORPORATE PROFILE
THE TFG DIFFERENCE TFG is one of the foremost independent chain-store groups in South Africa
and has a diverse portfolio of 29 leading fashion retail brands offering clothing,
10,1% jewellery, cellphones, accessories, cosmetics, sporting apparel and equipment,
and homeware and furniture from value to upper market segments.
9,3% COMPOUND ANNUAL GROWTH RATE
IN TURNOVER OVER FIVE YEARS COMPOUND ANNUAL
GROWTH RATE IN SPACE
FOR TFG AFRICA OVER TFG was established in 1924 and listed on the JSE in 1941.
FIVE YEARS
The majority of our turnover is in the form of cash sales to customers, with the balance being from our own in-house credit
29 4 284
offering. Credit is offered to customers in South Africa, Namibia, Botswana, Lesotho and Eswatini. Revenue is also generated
from interest received on customers’ store cards and through value-added services available to our TFG Africa customers.
LEADING FASHION LIFESTYLE RETAIL BRANDS OF WHICH TRADING OUTLETS IN Our focus is on speciality retail where we invest in brands and build brand equity. Our brands cater for market segments
25
from value to upper income while providing convenient shopping experiences in-store and online. Our unique portfolio of
ARE OMNICHANNEL
26
COUNTRIES ON
brands, geographic spread and customer retention initiatives differentiate us from other retailers locally and abroad.
South Africa and Namibia are TFG Africa's most significant markets, with the UK and Ireland being the most significant
markets for TFG London. TFG Australia is focused on Australia and New Zealand.
INCOME DIVERSIFICATION THROUGH
79%:21% CASH VS CREDIT SALES CONTRIBUTION
five
CONTINENTS
We source our product offering both locally and offshore, with strong in-house design teams across all business segments.
TFG Africa's manufacturing capabilities are coordinated through our own factories and various independent cut, make
and trim (CMT) factories. This provides significant quick response capability and is a key differentiator for the Group.
26,4 million R378,1 million INTEGRATED ONLINE
PLATFORM
FOR ALL TFG AFRICA
TOTAL NUMBER OF INVESTED IN
myTFGrewards LOYALTY ONLINE BRANDS WITH
DIGITAL TRANSFORMATION SINGLE CHECK OUT
MEMBERS (TFG AFRICA AND E-COMMERCE AND MULTIPLE PAYMENT
INCLUDING JET) OVER THE PAST TWO YEARS OPTIONS
13,9 MILLION
SOCIAL MEDIA FOLLOWERS
TFG AFRICA SOCIAL MEDIA AUDIENCE
AHEAD OF CLOSEST COMPETITOR
>200%
AS AT MARCH 2021 ACROSS ALL
TFG BRANDS
AND 152 MILLION
SITE VISITS DURING THE PAST
18% TFG AFRICA MARKET SHARE OF
ONLINE TRAFFIC COMPARED TO “ONLINE ONLY” BRANDS
FINANCIAL YEAR (SimilarWeb online monitoring tool, user sessions for web and app March 2021)
37% TFG AFRICA MARKET SHARE OF ONLINE TRAFFIC COMPARED
TO “BRICK AND MORTAR” BRANDS
(SimilarWeb online monitoring tool, user sessions for web and app March 2021)
8 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 9
About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
HOW WE To understand what impacts our ability to create or preserve
value or what may erode value, we need to understand our
OUR PEOPLE
SUSTAIN VALUE operating context:
• Risks and opportunities are identified throughout the year
The resilience, skills and experience of our employees enable us to implement and execute our strategy and deliver our
products and services to our customers (read more from page 28).
through regular interaction with the business (page 80)
To achieve our vision, we need to • We look at the different market conditions,
ensure we have a robust business
macroeconomic factors and retail trends in TFG Africa,
TFG London and TFG Australia (page 63)
OUR BUSINESS MODEL
Our business model defines TFG’s business activities and the key resources we leverage in our journey to be the
model and that our strategy is • We rely on input from our stakeholders to understand what
leading fashion and lifestyle omnichannel retailer in Africa while growing our international footprint. Through
is material for TFG and what the Group must focus on to
responsive and progressive. remain a competitive and sustainable business that delivers our business activities, we deliver on our strategic objectives in the short, medium and long term and transform
shared and sustainable value (page 22) resources into outputs and outcomes for our stakeholders.
This requires more than a business as usual approach –
it requires an integrated approach to value creation.
We aim to report on our value creation journey in a
balanced and transparent manner, reflecting on how
we have created and preserved value, as well as how OUR MATERIAL MATTERS, VALUE THROUGH GOVERNANCE
value has been eroded. While we strive to deliver
sustained value, we understand that our strategic RISKS AND OPPORTUNITIES We strive to create shared value, while ensuring the relevance and sustainability of our business model, underpinned
by good governance (read more from page 42).
choices, as well as the evolving context we operate We identify those matters that may influence our ability to
in, may only preserve or, at times, erode value. create or preserve value in the short, medium and long term as
Where this is the case, we aim to report on how we well as what may lead to value erosion. These matters inform
are responding as we deliver on our purpose. our strategy to manage the risks and maximise the opportunities
that present themselves (page 80). Financial capital
Our vision, mission and values –
common threads that connect us Manufactured capital
OUR STRATEGIC PILLARS
OUR VISION AND MISSION DRIVE OUR BUSINESS MODEL Human capital Merchandise
procurement:
To be the leading fashion and lifestyle omnichannel local suppliers
retailer in Africa while growing our international footprint DIGITAL TRANSFORMATION Intellectual capital and imports
by providing innovative products and creative customer
experiences and by leveraging our portfolio of diverse
brands to differentiate our offering. Our talented and Social and relationship capital
engaged people will always be guided by our values, Retail:
Design and
social conscience and customer-centric mindset. Customer Leadership Profit Growth 79% cash turnover, Our manufacturing:
Natural capital
& employee
21% credit turnover business 87% of units
obsession
OUR VALUES OUR TFG CULTURE ead more about our business model
R 88% store turnover,
activities manufactured by TFG
Merchandise Supply
TFG believes that teamwork coupled with Chain are quick
professionalism in all aspects of retailing will
from page 52. 12% e-commerce response units
continue to be the foundation for the future.
OUR SUSTAINABILITY STRATEGY IS A turnover
CRITICAL THREAD THROUGHOUT OUR
BUSINESS STRATEGY THAT SUSTAINS US
PASSIONATE ABOUT SERVICE
P
We remain committed to creating shared value by driving
We passionately and truly believe that social and environmental benefits for our stakeholders while Supply chain
the customer comes first. supporting our four-pillar business strategy. We continue logistics:
Mix of insourced and
reporting on our contribution to Sustainable Development
RESILIENCE outsourced models
R
Goals (SDGs) 8 and 12, and added SDG 9 this year as it The outputs of our business activities include products
e have the courage of our convictions and
W is strongly aligned to our localisation strategic priority. and services and by-products and waste (page 53).
the boldness to constructively challenge. We acknowledge there may be other SDGs we support
indirectly but we believe it is important to focus our efforts
INTEGRITY and disclosures on demonstrating meaningful impact.
I ur word is our honour, we are
O
honest and ethical.
Localisation and job creation
DIGNITY & RESPECT
D e treat everyone the way we want
W
to be treated.
People and communities
The outcomes of our business activities are the internal and external consequences for our capitals that may influence our
stakeholders positively or negatively. Value creation, preservation or erosion is measured per key resource and linked to
EMPOWERMENT Environmental efficiency relevant stakeholders.
E2 e embrace diversity and create equal
W
opportunity for all in a supportive environment. Product stewardship Customers Shareholders Employees Suppliers
and supply chain
EXCELLENT PERFORMANCE Government, Non-profit
e are accountable and drive performance
W legislators and organisations and Environment
Read more from page 14 and in our sustainability overview
in a creative and innovative way. regulators communities
report, available on our website.
10 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 11
About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
How we sustain value continued
Looking back
on 2021 -6,7% Down R2,3 billion year-on-year – however,
we remain confident that we are well-
90% 100%
positioned to deliver on revenue-generating
GROUP RETAIL
TURNOVER growth initiatives going forward
OF TFG AFRICA’S PLASTIC
OF TEXTILE WASTE WAS
R629m
Investing for the future – 81% of this PACKAGING WAS REUSABLE,
RECYCLED BY TFG AFRICA
investment during the past year was RECYCLABLE OR COMPOSTABLE
expansionary and supports our digital
CAPITAL INVESTMENT transformation journey
12,0%
-80,8%
GROUP ONLINE
TURNOVER
CONTRIBUTION
TFG is included in the
FASHION TRANSPARENCY INDEX, 91%
which encourages brands to be more transparent and OF TFG AFRICA’S SUPPLIER
HEADLINE EARNINGS Up 33,4% year-on-year – with to provide enhanced disclosures in respect of social, SPEND (EXCLUDING JET)
PER SHARE (HEPS) environmental and supply chain matters IS WITH SEDEX COMPLIANT
demand for online expected
VENDORS
to increase exponentially
497 jobs 42,3% TFG is included in the
WERE CREATED IN
OF OUR TOTAL
FTSE/JSE RESPONSIBLE
TFG AFRICA FACTORIES INVESTMENT INDEX
APPAREL PROCURED
LOCALLY IN SOUTH AFRICA
(including CMT partners)
TFG IS A
SUCCESSFUL ACQUISITION
1 471 % level 6 and integration of 425 JET stores NET AMOUNT OF
LEARNERSHIP AND
INTERNSHIP OPPORTUNITIES
CONTRIBUTOR TO
BROAD-BASED R3,8bn
>5 600
BLACK ECONOMIC
WERE CREATED IN THE GROUP EMPOWERMENT RAISED THROUGH A
DURING THE PAST YEAR jobs saved WELL-EXECUTED AND
(B-BBEE)
through Jet acquisition SUPPORTED RIGHTS ISSUE
in South Africa
12 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 13
About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
AN OVERVIEW THE FOUR PILLARS OF
OUR BUSINESS STRATEGY
OUR SUSTAINABILITY
PILLARS SUPPORT THE
OF OUR BUSINESS STRATEGY
STRATEGY Customer & employee obsession How we measure customer and employee success
• Number of myTFGrewards customers
Our sustainability strategy is critical in enabling us to deliver
on our commitment to create shared value by driving social
Our strategic objectives:
• Number of active accounts and environmental benefits for our stakeholders while
Our strategy is informed • Deliver superior customer and employee experiences
• Number of customer-facing employees trained through
supporting our four-pillar business strategy.
across our retail brands
by our vision, mission the TFG Retail Academy
• Leverage data science to improve our customer
Localisation and job creation
and values, with our TFG experience and engagement across all our retail brands
We strive to increase local procurement, supplier
• Grow our customer base through a targeted customer
Culture a common thread acquisition strategy
development and capacity expansion to diversify
supplier risk and to increase local job opportunities.
that connects strategy • Develop a long-term environmental, social and governance Our intent is to grow our business by offering
(ESG) strategy to create broader economic and social value,
and performance. Digital aligned with international trends and best practice
our customers what they want, when they want
it thereby improving our customer and employee
transformation is a experiences across our retail brands.
wraparound that touches Leadership How we measure leadership success
• Number of training interventions during the year
each pillar, supported by Our strategic objectives:
• Employee turnover – total %
• Embed a performance-based culture that ensures that we
our sustainability strategy. attract, retain and develop the best talent in the industry • Employment equity – % representation of previously
disadvantaged groups among permanent employees
• Achieve credible empowerment credentials in South Africa, Product stewardship
• Gender diversity – % female representation
Our strategic pillars have remained underpinned by an implementation plan to ensure compliance
• Participants in disability learnerships/internships
and supply chain
broadly unchanged since 2015. Each
By developing an ethical and transparent supply
pillar has specific strategic objectives • Learnerships, internship and graduate opportunities
chain that sources commodities responsibly we
which were determined by the Operating (new roles created)
ensure sustainable sources of profits and growth.
Board and approved by the Supervisory We also believe that more sustainable fibres,
Board. A rolling, three-year strategic Profit How we measure profit success textiles and fabrics will become progressively
overview, which we refer to as our • Quick response contribution to total units manufactured (%) more profitable than some non-sustainable current
“Three-year Vision”, is updated annually.
Our strategic objectives:
• Gross margin (%) ones. We want to practise responsible product
This Three-year Vision includes financial • Optimise our brands’ supply chain capability, including stewardship in the way we design, manufacture, sell
their suppliers, buying processes and quick response • TFG Africa ROCE (%)
targets against the strategic objectives, and dispose of products to minimise environmental
• Optimise the flow of goods from source to customer to • Pre-pack units as a percentage of product received
where relevant, and is based on current impact and meet customer expectations.
enhance the customer experience • Free cash flow (Rm)
market conditions, planned initiatives and
expansion plans. Any targets exceeded • Enhance return on capital employed (ROCE) by • Improve energy efficiency (% reduction in KW/h per
during the year are reviewed as part of optimising profitability and capital management square metre (stores))
the next three-year strategic overview. • Reduce business waste (% waste recycled across all
TFG sites)
The strategic pillars, together with the • Reduce production waste (% textile waste recycled) Environmental efficiency
respective objectives, apply to the Group • 100% of plastic packaging to be reusable, recyclable or By working towards a zero-waste business and value
as a whole. The international expansion compostable chain, we optimise resource efficiency and protect
strategy of the Group commenced in profits. Our employees are our partners in reducing
emissions, improving efficiencies and reducing
January 2015 and the performance and Growth How we measure growth success
waste at head office, distribution centres and stores.
strategic objectives of these business • Retail turnover (Rbn)
segments continue to be included within Our strategic objectives:
• E-commerce turnover contribution to retail turnover (%)
the Growth pillar. More information about • Deliver a customer-focused, digital omnichannel ecosystem
• Cash turnover contribution (%)
our sustainability strategy is available in • Be the leading fashion and lifestyle omnichannel retailer in
our online sustainability overview report, Africa while growing our international footprint • Number of outlets
which also includes detail on our broader • Geographic turnover contribution to total Group
• Develop an innovative, sustainability-driven business model
turnover (%) People and communities
value-sustaining initiatives, progress and build partnerships that enhance TFG’s reputation
Our employees and their communities are at the
and approach.
core of our commitment to transformation. We
focus on development and holistic wellbeing while
Our key strategic priorities • Fast-track e-commerce evolution and digital transformation
creating inclusive workplaces to attract and retain
COVID-19 has triggered a structural shift in the way we do • Investment through the cycle talent. We want to differentiate our employee
business, elevating certain parts of our strategy. We have • Positioning for agility and flexibility offering and strengthen our employer brand to
identified key strategic priorities that cut across the four pillars • Capture market share: organic growth and opportunistic showcase leadership and drive growth.
of business strategy and which we believe will position us to mergers and acquisitions
remain resilient under extremely difficult and unprecedented
ead more about these priorities in a message
R
circumstances. These key strategic priorities are:
from our CEO from page 58.
14 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 15
About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
OUR BRANDS E-COMMERCE 12%
We have well-established
MERCHANDISE CATEGORIES
TFG’s merchandise categories respond to merchandise and fashion
e-commerce platforms and a trends and are used as the basis for inventory management, planning and
leading omnichannel offering profitability analyses.
We have a comprehensive portfolio of 29 retail brands that offer clothing, that offers customers a one-stop
footwear, jewellery, sportswear, mobile phones and technology products shopping experience across all
our merchandise categories.
and homeware and furniture. Our diverse brands allow us to push the The contribution to revenue of our
boundaries of the retail industry in new and innovative ways – helping us e-commerce brands is on a growth
trajectory, and the Group continues
to achieve our vision to be the leading fashion and lifestyle omnichannel to invest in e-commerce and Cellphones
retailer in Africa while growing our international footprint. omnichannel innovation.
TFG's three business segments each have their own local management teams, which report into the Group's head office
in Cape Town. Retail brands within these business segments are supported by centralised support services structures.
TFG’S RETAIL BRANDS SPAN VARIOUS MARKET SEGMENTS
Clothing:
family
Clothing:
female
fashion
UPPER MARKET
MID TO UPPER MARKET Clothing:
male
fashion
MID MARKET
Clothing:
sport
VALUE MARKET
Clothing:
youth
fashion
myTFGworld, the Group’s online marketplace, consolidates 17 of our TFG Africa brands from value to upper end on one online platform.
R
ead more about our brands in appendix 7 on page 170.
Cosmetics
TFG AFRICA (OUTLETS) 67% TFG AUSTRALIA
(OUTLETS) 16%
Homeware
and furniture
TFG LONDON (OUTLETS) 5%
Jewellery
16 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 17About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
TFG
LONDON
OUR FOOTPRINT 5%
Warehousing and distribution
for TFG London and TFG Australia
is based on an outsourced model,
4 284
CONTRIBUTION
TO TURNOVER
TOTAL OUTLETS and manufacturing is performed
(2020: 4 083)
Group 1 Sweden by an established long-term global
34 891 Ireland
and UK
supply base.
TOTAL EMPLOYEES 380
(2020: 29 776)
188
12 Netherlands
2 929 44 Germany
TFG AFRICA OUTLETS 5 34 Switzerland
(2020: 2 577) TFG USA 27
28 987
Spain
Africa
20 Kuwait
15 Japan
5
EMPLOYEES Qatar
(2020: 23 268) 4
17 2 Hong Kong
Bahrain 1
14 UAE
Saudi Arabia 7
801 21
3 Macau
TFG LONDON OUTLETS Mexico
(2020: 972) TFG
London TFG
2 480 AFRICA 1 Singapore
EMPLOYEES
(2020: 3 586)
31 Zambia
67%
CONTRIBUTION
TO TURNOVER
554 Namibia 106
44 Botswana
Australia 487 33
TFG AUSTRALIA OUTLETS 18 Eswatini
(2020: 534) TFG 20 Lesotho
3 424 Australia
EMPLOYEES
(2020: 2 922) 2 710
New Zealand 34
TFG
AUSTRALIA
E-COMMERCE
16%
South Africa
6 | 44 739m 2
12%
CONTRIBUTION
SOUTH AFRICA – WESTERN CAPE Insourced TO TURNOVER
distribution
1 | 22 000m 2
centres
CONTRIBUTION
TO TURNOVER
SOUTH AFRICA – GAUTENG
TFG Africa procures merchandise both locally in
1 | 25 000m 2 Refer to page 17. South Africa as well as through imports.
SOUTH AFRICA – DURBAN
8 | 91 739m 2 In South Africa, TFG Merchandise Supply Chain TFG’s number of stores
SOUTH AFRICA – TOTAL directs the manufacturing of clothing, with TFG’s number of concessions
18% of TFG Africa's clothing procured from TFG Africa
its own factories and other local CMT factories TFG London
with whom we have strategic alliances. TFG Australia
18 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 19About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
OUR TIMELINE
OUR HISTORY 2021
Jet acquired
AT A GLANCE 2021
George Ivan Rosenthal founded TFG in 1924. Launch of
He started out in clothing retail in America, TFG Jewellery online,
but became interested in other markets including Galaxy & Co –
our first purely digital offering
when the boom days in America ended. His First
Cents
research showed that while South Africa was
per international 2021
very much an underdeveloped country, it had share acquisition Launch of Sportscene app Rm
a traditional fondness for American goods
2001 2012 2021 40 000
and know-how, and so he set sail for South 25 000 2010 Introduced Johnny Bigg
@home launched Prestige Clothing
Africa with little money, a lot of confidence Foschini Limited
acquired as a purely digital offering
and a grand plan. When naming his company, changed to in the USA
35 000
TFG Limited 2017
he decided on an old Italian name, Foschini. 2001 2012
Fashion Express hi launched Damsel in a Dress
20 000
He found that Johannesburg was one of launched acquired 30 000
the best shopping areas in South Africa and
started leasing premises. On 27 November 1925,
2000
Matrix 25 000
the first Foschini store opened on Pritchard launched 2019
15 000
Street, Johannesburg and more stores across 2005 Launch of
South Africa soon followed. For the first time,
@homelivingspace 2017 Donna and 20 000
launched Launch of Foschini The FIX online
South African women had access to fashion cosmetics, Markham and shopping
garments – garments that were affordable, 10 000
2005 Fabiani online shopping
15 000
well-made, up-to-date and accessible to a Luella launched
2017 2019
wider public. Expansion of Relay Jeans
Caledon factory launched as 10 000
Foschini had arrived. 2014 2017 stand-alone brand
5 000
Luella incorporated (previously included
DonnaClaire
He continued to expand the business and within Foschini stores in Markham) 5 000
rebranded as Donna
within two years after opening, Foschini had
nine branches across South Africa. In 1941,
0
13 580 14 989 15 864 17 898 23 470 29 776 34 891 0
George registered Foschini Dresses Proprietary
Limited on the Johannesburg Stock Exchange,
the first clothing retailer to do so. 2008
Since then, the Group has continued to grow. 2004 2011 2013 2016 2018 2020
Today, it consists of 29 brands in 4 284 outlets Duesouth Fabiani acquired Matrix rebranded Launch of Totalsports, RAG acquired Sneaker Factory
in 26 countries selling a broad range of launched as Mat & May Sportscene and and RFO brands
2000 2011 Duesouth online
2018 launched
merchandise categories to customers both
Totalsports Charles & Keith franchise
2015 shopping
Launch of
in store and online. acquired partnership
Phase Eight @homelivingspace, 2020
acquired 2016 Exact, Foschini Duesouth Escapes
2011 SODA Bloc launched and SODA Bloc launched as
2015 online shopping stand-alone
Franchise rights for G-Star RAW
RCS disposal 2016
in South Africa acquired brand (previously
Franchise rights
2018
2015 Hobbs acquired
included in
Launch of @home for Colette acquired Duesouth)
and hi online 2018
BEFORE 2000 shopping
2016
SODA Bloc
2020
Franchise rights Closure of
incorporated within
for Next acquired Duesouth
Foschini stores
1924 1968 1996 2016 2020
Founded Markham acquired Sportscene acquired Fashion Express 2018 Charles &
rebranded as The FIX Next franchise Keith franchise
rights ended
1941 1969 1999 partnership ended
Listed on the JSE Pages rebranded as Exact
2016
Pages launched Whistles acquired 2018
RCS established Archive launched
1958 1993 as stand-alone
Stanley Lewis buys major brand (previously
Sterns acquired
shareholding included in
Sportscene)
1994
1967 DonnaClaire launched
American Swiss Watch Company
acquired
Acquired Launched brand Launched online shopping Number of employees Turnover Closing share price
20 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 21About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
OUR STAKEHOLDERS SHAREHOLDERS
We have 12 644 shareholders, with 25,8% of shares held outside South Africa and 76,6% public shareholding. We believe
Our stakeholders are those individuals and groups that have an interest in it is vital to ensure alignment between our strategic focus and the long-term interests of shareholders, and to continue to
our business, and can influence TFG's ability to create or preserve value. meet their expectations through consistent strategy execution and risk management.
If not managed proactively, these relationships can sometimes result in
Our response and actions in 2021
value erosion. How we engage
We engage with shareholders through presentations, Shareholders’ main concern during the past year was the
By understanding the common threads that connect us to our stakeholders, we can contribute to improved customer impact of COVID-19 on the business, and interactions
roadshows and meetings where we receive feedback and
and employee experiences and enhance our supply chain. Stakeholder engagement also provides input into what is were therefore mainly centred around our response to the
discuss their matters of interest.
material for TFG and what the Group must focus on to remain a competitive and sustainable business. business impact with regard to remuneration, dividends
and our capital position. We value the strong support
that we received from shareholders with the rights offer,
A RESPONSIVE APPROACH TO ACHIEVE QUALITY ENGAGEMENTS which was 2,3 times oversubscribed and allowed us to
strengthen the statement of financial position.
CUSTOMERS We have continued more frequent communication
with shareholders, initiated in the previous financial
year, including quarterly trading updates. The Board
Our customers are diverse in their spread across geographies, gender, age and income groups. Our customers are a had productive engagement with shareholders on
strategic priority as they provide income through the purchase of our products and services. Therefore, we put our remuneration, which shaped our approach and led to a
revised remuneration structure.
customers at the forefront of everything we do. We offer them a diverse range of fashion, lifestyle and homeware
choices through brand experiences that encompass their channel of preference.
R
ead more in our remuneration report from page 133.
How we engage Our response and actions in 2021 Key measures we track
Needs and expectations
We engage with our customers through our call centre, The safety and wellbeing of our customers, employees
As our major source of financial capital, shareholders • Share price performance (%)
digital media, online and in-store experiences as well and suppliers was a key priority during the past year.
require sustainable growth. This requires transparent and • Full-year dividend per share (cents)
as through focus groups and surveys. Our Voice of Throughout our business operations in all the territories
ongoing communication regarding environmental, social and
Customer tool is an example of an effective way for all where we have a footprint, we implemented strict • ESG ratings
governance-related matters, our strategy, business model,
TFG Africa brands to listen to their customers’ point of COVID-19 safety protocols in our stores to ensure the
approach to capital allocation and future growth prospects.
view daily. safety of our customers, and our frontline employees.
This included screening protocols upon store entry, as
required by law, adjusting store layouts where required
to ensure social distancing and limiting the number of
customers who shop at the same time. Store employees
EMPLOYEES
were also issued with masks where regulations required this.
We value the skills and experience of our employees which enables us to implement and execute our strategy and deliver
In TFG Africa, we introduced new payment channels to
our products and services to our customers. Our 34 891 employees are diverse in their spread across geographies,
account customers and created virtual customer centres
gender, age and skills profiles.
to ensure that we could still assist our customers, even
during the initial level 5 lockdown in April 2020.
How we engage Our response and actions in 2021
To support struggling customers during the tough The past year required different ways of engaging with The safety and wellbeing of employees were of paramount
economic conditions, we also offered a payment holiday employees, both as a result of remote-working but also importance during the past year, and so was the preservation
for April and May 2020. to support our employees during a challenging year. of jobs. In TFG Africa, we therefore continued to pay
employees during April and May 2020, while Supervisory
Multiple channels were used for communication, including
Needs and expectations Key measures we track and Operating Board fees were temporarily reduced in
WhatsApp and other digital channels and a COVID-19
support of employees. Those employees, who were able
Customers raise specific issues relating to in-store • The number of myTFGrewards customers portal which provided access to communication, policies to, were assisted to work from home, while employees
experiences or credit queries. They also engage with us • The number of active TFG Africa account customers and documents in one secure place. who were unable to work from home were not required
regarding merchandise and fashion trends. to take annual leave during this time. We also assisted
• Customer complaints
eligible employees with access to government relief
through TERS from June 2020.
In TFG Australia and TFG London, employees were able
to receive payment through the JobKeeper and furlough
government-relief programmes.
Upon return to the workplace, various screening
procedures were put in place in line with government
health and safety protocols. This included using an
app we developed to allow employees the opportunity
to complete the screening questions on their mobile
devices, prior to entering any TFG buildings.
22 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 23About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
Our stakeholders continued
EMPLOYEES continued SUPPLIERS continued
Our response and actions in 2021 continued Our response and actions in 2021 continued
As physical training sessions could not be held during this Within TFG Africa, we continue to structure investments
year, we made online learning available for employees, – both monetary and non-monetary – into our TFG Africa
which included COVID-19 training on health and safety. local manufacturing supply base to encourage job creation.
We continuously explore opportunities to provide access
To keep everyone connected while working from to and develop Black-owned and Black women-owned
home, all employees could log in virtually to financial suppliers. We spent over R1,6 billion this year with Black-
results presentations and communications sessions, owned and Black women-owned suppliers. We have a
‘Conversations with Anthony’, was launched to stream deliberate strategy for supplier development that includes
through updates on strategic initiatives. During the early incubation and spend shifting to empowered suppliers.
and most critical phases of the lockdown, there were In 2021 we provided more than R36 million of support to
weekly updates sent out from our CEO to address critical supplier development beneficiaries in the form of loans and
issues and reassure employees. advances, donations of machinery and fabrics, preferential
payment terms and human resources capacity.
Read more about our employees and specific
initiatives for the past year from page 28.
Needs and expectations Key measures we track
Needs and expectations Key measures we track Our suppliers require oversight and transparent • Percentage of TFG Africa apparel units procured from
Employee engagement focus areas include communication • Employee retention communication on various supply chain-related issues TFG Merchandise Supply Chain
about training and development, human resource policies, and non-merchandise procurement matters. • Percentage of Top 100 suppliers onboarded on the
• Investment in training, including bursaries
remuneration and performance management. Sedex platform
• Employees participating in training interventions
(physical and virtual) • Enterprise and supplier development spend
• Learnerships, internships or apprenticeship programmes • Number of jobs created in our strategic suppliers
• Diversity and inclusivity
• Employee wellbeing
• Employee engagement
GOVERNMENTS, LEGISLATORS AND REGULATORS
SUPPLIERS This stakeholder group includes revenue authorities, regulators and government departments in the countries
in which we trade.
The TFG supplier base consists of merchandise and non-merchandise suppliers, with the latter including landlords. Our response and actions in 2021
How we engage
Our mutual intent is to establish trust and loyalty and align business interests for the long term. This ensures that
We engage with government through business and As a proudly South African business, and in support
we deliver merchandise of high standards, at the right price and in locations convenient to our customers. Through
industry associations such as Business Leadership of government’s 2030 retail, clothing, textile, footwear
transparent supplier take-on procedures and agreements, we ensure we source ethically.
South Africa and the National Clothing Retail Federation and leather (R-CTFL) Masterplan for the clothing
of South Africa, employer organisations outside of manufacturing sector, TFG Africa has been actively
How we engage Our response and actions in 2021 driving increased local procurement and supplier
South Africa and the Australian Retail Association.
We engage with suppliers through various teams Supplier engagements intensified this year due to We provide verbal and written submissions on proposed development over the past five years. Collaborative
within our business, depending on the nature of the COVID-19 restrictions and supply chain disruptions. legislative changes (both in South Africa and outside of initiatives in 2021 include:
engagement. Engagement occurs through formal take- South Africa) and attend industry-relevant meetings at
We proactively engaged with landlords in each of our • Engaging with government in support of a cut in
on procedures, supplier audits, visits and assessments, Parliament in South Africa.
territories in order to reach agreement on fair rentals both yarn import duties to advance South African clothing
merchandise order discussions and service requests,
during and post the periods where we were not able to manufacturing.
purchase order discussions, landlord negotiations and
trade, while we worked with our merchandise suppliers
account management discussions. Within our local • Investing in our network of CMT partners to create
to either cancel or delay merchandise orders in order to
TFG Africa supply chain, we also partner with small capacity and ensure their sustainability. We have
respond to the shift in customer demand and to prevent
suppliers to increase and improve their operational and started a new SMME cluster in partnership with the
the build-up of inventory.
financial capacity. KwaZulu-Natal government, which will assist 15 new
companies and support our capacity requirements.
Needs and expectations Key measures we track
Government requires businesses to participate in growing • Regulatory fines or penalties
the economy through job creation and by complying with all • Taxes – direct, indirect and staff
applicable regulatory requirements.
• B-BBEE level contributor status
24 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 25About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
Our stakeholders continued
COMMUNITIES AND NON-PROFIT ORGANISATIONS ENVIRONMENT
Our employees and their communities are at the core of our commitment to transformation, and we are transforming Fashion retail depends on a long and complex supply chain that requires water, materials, chemicals and energy from
to reflect the diversity of our customer base and the communities we operate in. its point of origin in agriculture and petrochemical production, manufacturing, logistics and retail.
How we engage Our response and actions in 2021 How we engage Our response and actions in 2021
In South Africa, the TFG Foundation serves as the vehicle In South Africa, our socio-economic investment We have established formal business champions and During the year we initiated efforts directed at
through which we channel social investment activities in of R13,9 million this year contributed to: working committees for each sustainability strategy pillar, understanding the upstream environmental impacts of
communities. Other key partners include government, including, for the first time this year, the environment. the products that we buy, manufacture and sell; as well
for example through the R-CTFL Masterplan, and the • The community and empowerment work of non-profit Fundamental to how we bring about change in this area is as further downstream, for example in the area of fabric
Services Sector Education and Training Authority (SETA). organisations through donations of R3,5 million worth through our procurement and we are working to formally recycling and avoiding clothing ending up in landfill.
of merchandise evaluate the environmental impact of our purchases as
Throughout the Group, our brands also make direct In our own operations, we are already increasing our
• Student bursaries to the value of R1,2 million well as the credentials of our suppliers in this regard.
contributions to the communities in which they operate resource efficiency across our operations by using world-
• Face mask donations to over 300 000 learners at Increasingly, it is the role of these working committees to
through direct brand-led corporate social investment class automation and more energy efficient lighting and
primary schools across South Africa advocate for consideration of environmental interests and
activities. manufacturing equipment.
trade-offs in the context of business activities, decisions
• Distribution of 30 000 Sew Good blankets to
and sources of supply. Going forward, we are looking etail on these initiatives, including performance
D
communities in need
to thoughtfully engage more actively outside of the measures and targets, can be found in our
In Zambia, we partnered with SOS Children’s Villages to organisation with relevant external stakeholder groups sustainability overview report, available online.
distribute 1 200 masks to five primary and two combined with regards to environmental aspects.
schools in the Copperbelt area. Following the outbreak of the
COVID-19 pandemic, the government of Zambia required all Needs and expectations Key measures we track
school children to wear masks. However, for many families
Due to the scale and complexity of fashion retail’s supply • Greenhouse gas emissions
and children masks were unaffordable. TFG Africa sourced
chain, the global fashion industry is one of the most polluting • Business waste reduction
a local supplier in Zambia to produce masks and assist in
and wasteful industries in the world. In response, fashion
identifying schools that would benefit most. • Textile waste recycled
retailers are increasingly expected to focus on climate risk
in the supply chain and mitigating this through renewable • Reduced use of plastic
TFG Australia continued to support Thread Together, an
Australian organisation whose mission and focus is to energy purchases, actively reducing supply chain carbon • Reuse of supplier cartons
source new and excess clothing from fashion retailers and footprints and improving material selection. • Energy efficiency
redistribute items to those in communities most in need. • Transparency in own operations
Total donations for the financial year amounted to 71 000kg
which equals approximately 212 000 shirts.
TFG London donated a selection of samples and clothes to
Smart Works UK, a charity that provides high-quality interview
clothes and interview training to unemployed women in
need. These women are referred from organisations such
as job centres, work programmes, prisons, care homes,
homeless shelters and mental health charities.
Other social investment initiatives are detailed in our
sustainability overview report, available online.
Needs and expectations Key measures we track
The Group, in all three of its major territories, works with TFG Africa:
various organisations to provide assistance and support • Blankets made and donated through Sew Good
through monetary and/or merchandise means.
• Amount donated through TFG Africa corporate social
In South Africa, many communities are challenged by lack investment funding and brands
of access to housing, clean water and sanitation, quality • Amount invested into beneficiary schools
education, social protection, good healthcare, electricity and
jobs. These challenges are exacerbated by slow progress TFG London and TFG Australia:
with economic empowerment and endemic corruption, • Value of donations in local currency
combined with the impact of measures to mitigate
the spread of COVID-19. Communities and non-profit
organisations require collaboration between the private
sector, public institutions and development partners to help
build resilient economies post-COVID-19.
26 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 27About our report Who we are Our value creation positioning Value creation through proven strategy Value created through performance Governance appendices Other appendices Company information and
shareholders’ calendar
OUR PEOPLE RESPONSIBILITY
The Operating Board is responsible for the Group’s strategy formulation and the day-to-day management of all aspects
INTRODUCING OUR OPERATING BOARD of the operations of the retail trading and service divisions. In addition, they are responsible for deliberating and making
decisions or recommendations on all matters affecting TFG’s strategy and operations, including risk management and
the succession of executive and senior management.
The key focus areas per strategic pillar remains as follows:
A E Thunström (51)
BCom (Hons Acc), CA(SA)
DIGITAL TRANSFORMATION
Chief Executive Officer
Joined the Group in 2015
CUSTOMER &
LEADERSHIP
EMPLOYEE OBSESSION
B Ntuli (44)
• Store location, design and architecture • Human resource recruitment, training,
BCom (Hons Acc), CA(SA), AMP (Harvard)
• Credit management and customer development and remuneration
Chief Financial Officer
relationship marketing and systems • Development and refinement of the
Joined the Group in 2019 business philosophy, value system and
• Employee and Customer attraction and
retention strategies performance management
S A Baird (55) • Development, review and
implementation of the skills development
Group Director – Retail
and employment equity plans
Joined the Group in 1986
• Development, implementation and
monitoring of the transformation strategy
J Fisher (48)
BSc (Hons) Mathematics and Computing Science
Group Director – Financial Services
PROFIT GROWTH
Joined the Group in 2013
• Merchandise sourcing, buying, • Acquisition, development and
D B Gedye (62) warehousing and distribution maintenance of information and
Group Director – Retail technology systems, including
• Financial management and administration
Joined the Group in 1979 e-commerce and digital transformation
• Development, review and achievement
initiatives
of budgets in relation to sales, operating
expenses and capital expenditure (capex) • Development, implementation and
monitoring of revenue-generating growth
• Development and implementation of
S E Morley (51) initiatives
business optimisation initiatives
BSocSc • Approval of transactions regarding
• Cash flow and liquidity management
Group Director – Human Resources investment in accordance with parameters
• Approval of transactions regarding set by the Supervisory Board
Joined the Group in 2002 divestment, refinancing and restructuring
in accordance with parameters set by the
G S Naidoo (53) Supervisory Board
BSocSc (Hons), MA (Ind Psych), AMP (Harvard)
Group Director – Retail
Joined the Group in 2005
OUR TFG CULTURE
OTHER RESPONSIBILITIES
• Monitoring and proactively responding to the • Development, monitoring and audit of internal controls
COVID-19 pandemic • Development and monitoring of operational policies
• Formulating, developing, executing and refining the and procedures
Group’s strategic plan • Adoption, implementation and monitoring of corporate
• Identification, assessment, mitigation and risk governance practices and meeting standards set out in
management King IV
28 THE FOSCHINI GROUP INTEGRATED ANNUAL REPORT 2021 29You can also read
