RETAIL TURNOVER
R3 719,0m
NO. OF STORES
484

FOSCHINI DIVISION

THE FOSCHINI DIVISION REMAINS THE PRIMARy WOMENSWEAR FASHION DIVISION IN THE GROUP.

POSITIONING

The Foschini division is the womenswear fashion division in the group, comprising the Foschini, Fashion Express, Donna-Claire and Luella chains of stores.

Foschini offers affordable fashionable clothing, footwear and cosmetics to women with a target market of 18 to 35 year olds in the LSM sectors 6 to 10. Foschini stores are located in prime shopping centres and CBDs.

Fashion Express is the value chain, supplying clothing and footwear for customers in the LSM 5 to 9 categories. Its stores are located in CBD environments in both large and small towns and in both small and regional shopping centres.

Donna-Claire supplies fashionable clothing for larger-sized women of all ages. The target market is the LSM 6 to 10 categories. Most of the stores are located in prime shopping centres, with a recent roll-out to secondary malls and some CBDs.

Luella, a relatively new chain, is devoted to footwear and handbags, offering reasonably priced products in a modern international store format. Luella stores are all in key shopping centres.

REVIEW OF THE YEAR

After a soft start to the year the division performed better in the second half and finished the year with full-year turnover growth of 12,5%.

In total 36 new stores were opened across the division’s four chains. In addition, 14 stores were enlarged or relocated.

During the year a Foschini and a Fashion Express store were opened in Zambia − the division’s first stores in this country and the first beyond the common southern African customs union (which includes Namibia and Botswana). A number of key lessons were learnt in the process, and as a result of the good performance of these stores four new stores are planned for the next year.

   %  
    2011 change 2010
Turnover Foschini2 833,510,7 2 560,4
(R million) Fashion Express497,425,3 396,9
  Donna-Claire 349,1 12,6 310,0
  Luella 39,0 0,8 38,7
  Total 3 719,0 12,5 3 306,0
Number of stores Foschini 228 2,2 223
  Fashion Express 148 17,5 126
  Donna-Claire 90 2,3 88
  Luella 18 5,9 17
  Total 484 6,6 454
Floor area (gross m2) Foschini 164 934 3,5 159 343
  Fashion Express 43 064 16,9 36 836
  Donna-Claire 24 469 2,2 23 949
  Luella 2 501 3,1 2 426
  Total 234 968 5,6 222 554
Number of employees Foschini 4 111 1,3 4 059
  Fashion Express 759 21,2 626
  Donna-Claire 519 3,2 503
  Luella 82 (7,9) 89
  Total 5 471 3,7 5 277
Most significant countries from which merchandise is imported China   China


More than 12 000 square metres of retail space were added during the year and, together with enlargements, the total retail space grew by 5,6%.

The most substantial developments were in the following locations:
Manda Hill Centre − a new mall in Lusaka, Zambia  
I’langa − a new regional centre in Mbombela  
Goldfields Mall − a new regional centre in Welkom  
Brits Mall − a new regional centre in Brits  
Durban West Street − a major update of an existing Foschini store  

Stores were also opened in smaller shopping centres, including Mamelodi Crossing, Randridge Mall and Chris Hani Mall in Vosloorus.

Whilst economic conditions were more favourable during 2011 than in the previous year, consumers remained cautious. Reductions made in interest rates boosted consumer confidence and spending. Whilst the good spirits generated among the public by the 2010 FIFA World Cup™ boosted the economy overall, there was only a minimal impact on the division’s brands.

The division has however benefited from the group's supply chain initiatives which have had a significant impact throughout all merchandise processes.

Consumer research indicated that pricing in the Foschini chain had risen beyond the reach of many consumers in the target market and price tiering became a key part of the product strategy. The buyers in this chain put additional focus on providing good ˝opening price points" in all key departments and this was achieved without affecting margins. Research indicators suggest that consumers now perceive the Foschini chain to offer very good value

COSMETICS

The Foschini cosmetics range brings together a number of major international brands including MAC, Estée Lauder, Clinique, Clarins, Elizabeth Arden, Revlon and L’Oreal. In most of the new-format stores in shopping centres the cosmetics departments have their own entrance, creating a standalone ambience. It has once again been shown that this layout increases footfall and benefits the other departments of the Foschini stores.

Annual turnover in cosmetics grew by 8,8% and is now close to R700 million. Although the first half provided a challenge in meeting stronger demand from consumers for value propositions, an update in merchandise strategy yielded a much stronger performance in the last two quarters, and by the year-end this department was trading above market growth.

CELLULAR PRODUCTS

Cellphones had a much improved year after a weak performance in the previous year. This upturn was attributable in part to improved stock levels of MTN products, and also the roll-out of Vodacom products to more stores.

With the creation of the group’s Retail Technology division, the cellular department within the Foschini division is managed centrally.

FOSCHINI

Clothing sales in the Foschini chain grew by 10,5% year on year, with comparable store turnover up 8,5%. While trading in the first half was more difficult increasing by 3,0%, the second half was substantially better with turnover growth of 18,2%.

An important factor in breaking through to acceptable levels of growth was a correction in the ratio of "casual to smart" stock largely as a result of carrying an excessive quantity of "smart" stock at the end of the previous year. The ratio was corrected in the first quarter.

The "casual to smart" ratio was in good balance after the winter of 2010 and the summer stock assortment was welcomed by the market, which was also pleased by the improved value on offer. These factors had a positive effect on the season’s turnover and ushered in a generally better performance in the second half of the year.

The total turnover of the Foschini chain in the full year, including its cosmetics and cellular departments, grew by 10,7%.

Seven new Foschini stores were opened during the year, the most significant of these being I’langa Mall in Mbombela, Manda Hill in Zambia and Cavendish Square in Cape Town. The performance of the Manda Hill store has been very encouraging and additional stores will be opened in Zambia in the coming year.

The performance of the Manda Hill store has been very encouraging and additional stores will be opened in Zambia in the coming year.

The opening of a Foschini store in the Cavendish Centre in Cape Town was a milestone for the Foschini brand and a new store design was created for the event. The reaction it received from both customers and staff was so positive that this store has formed the basis of a new concept which is being rolled out to new stores. As is the case with all new stores, variations and enhancements are made continuously.

An enlarged Foschini store will open in Sandton City, Gauteng, in November 2011 with a store concept that is showing exceptional promise.

FASHION EXPRESS

This value chain is now well established in the market-place and it had another good year of trading. It is built around the concept of "express yourself for less" and offers fashionable garments to customers in a pleasant shopping environment at prices that rival those of traditional cash retailers.

Total turnover grew by 25,3%, with comparable store turnover rising by 14,1%. Sales in the Fashion Express chain were consistently buoyant throughout the year, the increase being 23,6% in the first half and 28,7% in the second.

During the year 21 new stores were opened, and the initial target of reaching 150 stores was achieved. The chain has now set its sights on reaching the 200-store mark within the next three years.

In addition to the new stores opened, all the old-format Fashion Express stores received a renovation and the chain now has a consistent image across all locations.

DONNA-CLAIRE

The Donna-Claire chain grew sales for the full year by 12,6%. Sales improved in the second half of the year with growth of 21,6%, which has continued in the early weeks of the next year.

The chain opened six new stores during the year, a relatively low figure historically, as a decision had been taken to focus on getting optimal merchandise assortments into the stores rather than merely pursuing growth in the store footprint.

By limiting the number of new stores the chain was able to moderate its expenses and improve its profitability. The performance of the chain was further enhanced by achieving savings in mark-downs as a result of better stock clearances.

The slogan "fashion to celebrate your curves" encapsulates the essence of the new Donna-Claire brand, with the goal of supplying consistent ranges of fashionable products that will appeal to all South African women with fuller figures. There is a strong emphasis on improving the fit of garments as well as implementing appropriate pricing policies. The objective is to ensure that Donna-Claire shops become and remain the preferred shopping destination of the fuller-figure customer.

Historically the Donna-Claire chain served a relatively small niche market of older customers with largely conservative tastes in fashion. With the repositioning that has occurred, it is now appealing to a wider group of customers,including young adults who can expect to find well-tailored garments in appropriate fashion styles. There will be a drive to grow market share and take the brand to a higher level of awareness and appeal.

Mark-down statistics          
  2007 2008 2009 2010 2011
Mark-down value (Rm) 371,0 450,6 380,8 410,4 411,2
% of sales 15,1 17,4 15,0 15,2 13,5


LUELLA

Whilst the total sales in the Luella chain showed little growth on the previous year, the second half was far better with turnover growth of 15,9%. Progress was made in reducing the volume of discounts which resulted in an improvement in profitability, which has continued into the early part of the next year.

During the year one unprofitable store was closed and two new stores were opened. This takes the chain to 18 stores at the year-end, all of which are in key shopping centres.

There is further scope to improve the fashion level of the products supplied by the Luella chain which has the potential to become a 50-store chain.

A start has been made on incorporating Luella stores into Foschini stores and early results have been positive.

STOCK LEVELS AND MARK-DOWNS

The overall ratio of mark-downs to sales improved during 2011 to 13,5%, which is still above the target. Stock levels at the year-end were within an acceptable range.

The medium-term goal of the division remains to reduce clothing and footwear mark-downs to between 10% and 12% of sales, and to increase stock turn significantly.

SUPPORTING LOCAL INDUSTRY

The quantity of units produced by the group’s in-house manufacturing division, TFG Design Centre, for Foschini division grew substantially during the year as a result of closer collaboration with that division and its CMT (cut, make and trim) factories. TFG Design Centre expanded its casualwear capabilities by employing experienced designers for Foschini, Donna-Claire and Fashion Express, as well as increasing focus on additional product categories such as childrenswear and sleepwear. Through greater use of TFG Design Centre, the Foschini division has been able to achieve shorter lead times, faster responses to repeat orders, and at the same time provide support to local industry.

STRATEGY AND PROSPECTS

The division’s ongoing involvement in supply chain initiatives and its continuing investment of capital in its programme of new store openings and the refurbishment of existing stores is part of a long-term strategy to capitalise on South Africa’s proven pattern of economic growth. In the next year the division will open more than 30 new stores and will continue to upgrade existing stores, more particularly CBD stores.

The division is currently implementing initiatives to improve lighting efficiency throughout its stores as part of efforts to reduce the group’s environmental footprint and increase the energy efficiency of its stores.

The most significant store projects in the year ahead are:
Mall of the North (Polokwane) − a new mall in which all chains of the division will open stores  
Sandton City − enlargement of Foschini and new Donna-Claire stores  
Zambia − new stores in both Lusaka and Kitwe  

Renovations of major CBD stores in:
Johannesburg (Eloff Street)  
Pretoria (Church Street)  
East London and Newcastle.  

Store statistics            
          Current Projection
  2007 2008 2009 2010 2011 2012 2013
Foschini 207 211 217 223 228 235 240
Fashion Express 97 100 115 126 148 168 185
Donna-Claire 64 70 82 88 90 92 95
Luella 18 19 18 17 18 20 22
Total No. of stores 386 400 432 454 484 515 542
Closures 3 5 2 5 2 3 2
Floor area (m2) 178 206 191 787 210 659 222 554 234 968 247 000 260 000