Foschini owner, TFG, records staggering R400 million losses due to power cuts

As the South African business sector continues to strike the balance between electricity cuts and making profits, clothing retailer TFG who owns Foschini has registered massive financial losses.

Foschini owner, TFG, says because of the ongoing load shedding implemented by Eskom, it parted ways with a staggering R400 million in lost sales.

The company, TFG, is said to have plunged into a temporary dip for the first time since the hard lockdowns at the beginning of the ravaging Covid-19 two years ago.

However, the fashion retailer TFG, says it is advanced in its plans to significantly mitigate the effect of load shedding and plans to have 70% of its South African stores’ turnover protected by backup power by Christmas.

It is reported by News24 that as part of its backup power strategy, TFG last month indicated that it was the largest single customer of batteries manufactured by Elon Musk’s Tesla.

TFG CEO Anthony Thunstrom said the intense load shedding of up to Stage 6 in September had a greater effect than lower levels of load shedding as instituted by the embattled power supplier, Eskom.

“To put this into perspective, we were growing at strong double digits (sales) for the first half of September and then went into negative growth for the second half of the month, the only time we’ve been in negative territory since the first two months of Covid,” Thunstrom said.

“Then we bounced back to double-digit growth for October, when we had lower levels of load shedding.”

Thunstrom said the R400 million TFG lost in revenue translated to about R200 million in lost profits for the company, which owns a host of brands in SA, among them Jet, Sportscene, Totalsports, and @home.

Inspite of this devastating load shedding and its effects, TFG said it performed well given inflationary pressures, reporting continued market share gains as its gross profit increased 24.8% to R11.6 billion.

“We plan to have close to 70% of our South African stores’ turnover protected before Christmas,” he added.

“This is going to cost in the region of R200 million in additional Capex, some of which we will fund from other budgeted Capex projects. But really, not taking these measures isn’t an option at the moment.”

Thunstrom told News24 the group had taken a scientific approach to its backup power rollout, looking at protecting the stores that produced the greatest turnover and profit.

“We basically bought up pretty much every Tesla battery and alternate batteries and lithium batteries that were available in South Africa. That was actually the limiting factor. If we could have done 100%, we would have done 100%, but you’ve got to start somewhere,” concluded the CEO.