South African fashion retailer TFG (TFGJ.J) wants to locally manufacture 30 million pieces of clothing a year within four years as it increasingly turns away from global supply chains, its CEO said after the company swung to a half-year headline profit.
The owner of British womenswear brands Hobbs and Whistles and the local Foschini and Markham clothing brand has fared better than competitors as it has brought production closer to home in the past five years by expanding its own factories and buying new ones.
“Our continued build out of our manufacturing capacity and capabilities has really served TFG well at a time of unprecedented global supply chain disruptions and significantly de-risked our business,” CEO Anthony Thunström told investors.
The company said some of the 10 new manufacturing units would be added this year to existing factories and others would be standalone plants. The units, each with between 200 and 400 workers, would be spread across the Cape Town and Durban regions, Thunström told Reuters.
This has allowed the retailer, which also sells high-end furniture, to improve its lead times, which refers to the time from order to hitting the shelves, and compete effectively with fast fashion giants like Inditex’s (ITX.MC) Zara.
Its average quick response lead times are more than 50% lower than other suppliers, Thunström said, although he did not give a figure for that response time.
TFG swung to an operating profit before finance costs of 4.8 billion rand ($310.91 million) in the year ended March 31 versus a loss of 719.2 million rand a year earlier, as it recovered from COVID-19 restrictions which forced store closures across its three markets.
As restrictions have eased, consumers have refreshed their wardrobes and homes after months stuck at home.
Group revenue grew 29.7% to 46.2 billion rand, with retail turnover growth of 31.6% at 43.4 billion rand. Online sales grew 11.7% and contributing 10.2% to group retail turnover.
TFG, formally known as The Foschini Group, also resumed annual dividend payouts, declaring a final dividend of 330 cents per share.