TFG to cut menswear prices and close stores amid tough trading conditions

TFG, a leading South African retailer, is revising its menswear prices to attract cash-strapped shoppers. The move comes as the company faces a challenging trading period amid rising fuel costs and weak consumer confidence. CEO Anthony Thunström stated that the group is not expecting an imminent recovery in consumer spending and will instead focus on reducing costs and improving store profitability. The company has observed a trend of consumers trading down to cheaper clothing, particularly in menswear.

The retailer has reported a 1.5% decline in menswear turnover and a 4% drop in gross profit for the six months to September. The division was also affected by shipping delays and congestion at Durban port due to its reliance on imported merchandise. Thunström mentioned that the company is sharpening its opening price points and pricing architecture in response to the trend of buying down. This move aims to make TFG's menswear offerings more competitive in a market where consumers are becoming increasingly selective about spending.

TFG is also accelerating store closures as part of its strategy to adapt to tough trading conditions. The company shut 120 stores in the first half and plans to close another 60-80 before year-end, taking the total number of closures to between 180 and 200 stores. Almost half of the closed stores were in distressed central business districts, where consumer traffic has shifted towards malls and convenience retail formats. The closures have released R190m in working capital, and TFG estimates that about 20% of sales from closed outlets will migrate to nearby stores or its online platform, Bash.

Bash has become one of TFG's most important growth engines, with online sales surging 53.3% to R2.2bn in the first half. The growth is driven by the increasing popularity of buy now, pay later (BNPL) options among shoppers, particularly online. CFO Ralph Buddle stated that demand for TFG Money remains strong, but applications fell 10% in the first half as more consumers turned to BNPL options. The number of accounts on TFG's books declined 1.9%, while credit sales fell 2.4%, representing 25.8% of TFG Africa sales.

TFG has attracted 449,000 first-time online customers during the period, with more than 40% placing their first digital orders through Bash Store while visiting a physical outlet. The platform now operates across more than 3,200 stores. Thunström emphasized that the company is not building an e-commerce business to sit alongside a traditional store network but is using the combined capabilities of both channels to acquire customers, increase engagement, and improve the productivity of its retail infrastructure.

Despite weak consumer demand, TFG Africa grew turnover 3.8% to R19.7bn, supported by market-share gains and stronger sportswear sales. However, international conditions remain challenging, with operating profit falling 26.5% in the UK and 28.3% in Australia. The UK business is recovering from a cyberattack that disrupted online trading, while TFG is restructuring underperforming brands in both markets.

Thunström stated that acquisitions are off the table for now, with surplus cash likely to be directed towards further debt reduction or enhanced shareholder returns through dividends and share buybacks. The company has removed R257m in costs during the first half and targets a further R222m in the second half, with an expected annualized cost saving of about R854m and an annualized profit benefit of roughly R540m.

Key points

• TFG is cutting menswear prices to attract cash-strapped shoppers.
• The retailer is accelerating store closures, with plans to shut between 180 and 200 stores.
• Online sales surged 53.3% to R2.2bn in the first half, driven by the popularity of buy now, pay later options.