South Africa’s TFG Sees Profit Fall 59% After Writedowns
Africa · Southern
Key Facts
—Profit. Net profit for the year to 31 March 2026 fell to R1.32 billion from R3.19 billion, a drop of 59%.
—Writedowns. R1.02 billion of non-cash brand impairments: Phase Eight in Britain (R687m), Tarocash (R176m) and yd. (R156m) in Australia.
—Sales still grew. Group sales rose 7.1%, but only 2.8% once the newly acquired White Stuff chain is stripped out.
—Dividend. The final dividend was cut 39.1% to 140 cents a share, from 230 cents.
—Buyback. The group still spent R1.03 billion buying back 10 million of its own shares, at an average of R105.89.
The owner of Foschini, Markham and Jet sold more clothing than a year ago and still saw profit fall by more than half, because the value of the overseas brands it bought to escape South Africa’s slow economy no longer holds up.
Selling more, earning less
The Foschini Group, known on the Johannesburg exchange as TFG, is South Africa’s largest listed clothing retailer. It owns Foschini, Markham, Sportscene, @home and Jet at home, and a spread of chains in Britain and Australia.
In the year to 31 March 2026 it took R67.1 billion in revenue, up 7.2%, and sold 7.1% more goods than the year before.
Almost none of that reached the bottom line. Profit for the year came in at R1.32 billion against R3.19 billion a year earlier — a fall of 59%.
Headline earnings per share, the measure South African investors watch most closely because it strips out one-off items, dropped 33.5% to 675.4 cents. Basic earnings per share, which does include the one-offs, fell 58.1% to 411.2 cents.
The gap between those two numbers is the story. Deloitte reviewed the accounts and signed them off on 4 June 2026.
A billion rand written off three brands
TFG wrote R1.02 billion off the carrying value of three brands it owns abroad. The largest single hit, R687 million, went against Phase Eight in Britain.
In Australia it wrote down Tarocash by R176 million and yd. by R156 million.
A brand impairment is an accounting judgement, not a cash payment. It means the company no longer expects a business to earn what it once assumed, so it reduces the value carried on the balance sheet.
TFG bought Phase Eight in 2014, when department stores accounted for 70% of its sales. Those department stores have been shrinking ever since, and the company says repositioning the brand will hold back profits for years yet.
Three countries, three different problems
TFG Africa, which is two-thirds of group sales, grew 5.0%, or 3.5% on a like-for-like basis. It gained market share in womenswear and in homeware and furniture, and lost ground in menswear.
Online sales in Africa jumped 49.2%. But the gross margin slipped a full percentage point to 41.6%, and operating profit for the segment fell 14.7%.
TFG London looks strong at first glance, with sales up 29.4% in pounds. Strip out White Stuff, acquired in October 2024, and sales were flat.
Segment operating profit before the Phase Eight writedown fell 65.4%. The company blames weak occasion wear, struggling department stores and a cyber incident at a partner that runs one of its online concessions.
TFG Australia shrank: sales down 1.5% in Australian dollars, down 3.4% like-for-like, with operating profit before impairments off 27.2%.
Cutting the dividend while buying back stock
The board cut the final dividend to 140 cents a share from 230 cents, a reduction of 39.1%. In the same year the group spent R1.03 billion buying back 10 million of its own shares at an average price of R105.89.
Both decisions can be defended — a buyback lifts earnings per share over time, a smaller dividend conserves cash — but shareholders who rely on the income will notice that the company found a billion rand for its own stock in the year it paid them less.
The customer behind the numbers
TFG’s credit book tells you who is shopping. Credit sales grew 4.6% and now make up 25.8% of TFG Africa’s turnover, with the debtors book at R9.4 billion.
The company says it granted credit cautiously. Net bad debt still rose to R1.69 billion from R1.39 billion.
The group opened 233 stores and closed 242, ending the year with 4,914 across 18 countries. Finance costs climbed to R2.05 billion.
What it means beyond South Africa
For anyone watching emerging-market retail from outside, TFG is a test of a common strategy: a company in a slow-growing home market buys brands in richer countries to diversify. This year the diversification is what hurt.
South Africa held up reasonably; Britain and Australia produced the writedowns.
Trading since the year end has been subdued. TFG Africa sales grew 2.2% in the nine weeks to 30 May 2026, TFG London 1.7% in pounds, and Australia contracted 2.3%.
Management points out that gross margins in all three territories started the new year around a percentage point higher.
Frequently Asked Questions
How much did TFG’s profit fall?
Profit for the year to 31 March 2026 was R1.32 billion, down from R3.19 billion, a fall of 59%. Headline earnings per share fell 33.5% to 675.4 cents.
Why did profit fall when sales rose?
Mainly because of R1.02 billion in non-cash writedowns against the Phase Eight brand in Britain and the Tarocash and yd. brands in Australia, on top of thinner gross margins and higher finance costs.
What is a brand impairment?
It is a reduction in the value a company carries on its balance sheet for a brand it owns, made when future earnings are expected to be lower than previously assumed. No cash leaves the business.
Did TFG cut its dividend?
Yes. The final dividend was declared at 140 cents a share, down 39.1% from 230 cents the previous year.
It is payable on 20 July 2026.
Source: The Foschini Group Limited, reviewed condensed consolidated financial statements for the year ended 31 March 2026, released on SENS on 5 June 2026 and reviewed by Deloitte & Touche.
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