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A retail large is taking a more durable have a look at its retailer community as altering purchasing habits and weaker profitability power the corporate to rethink the place it invests.
The retailer has already closed dozens of areas this 12 months, and its newest replace reveals that the pullback from bodily shops isn’t slowing down. At the identical time, one a part of its enterprise is gaining momentum and serving to to form a extra digitally targeted technique.
Founded in 1924, The Foschini Group (TFG) is a South Africa-based multinational retail firm with 39 style and life-style manufacturers and greater than 4,900 retailers throughout 5 continents. Its portfolio spans clothes, footwear, jewellery, magnificence, know-how, dwelling items, and different classes.
TFG has confirmed plans to shut 180 extra shops over the subsequent three monetary years as it really works to enhance the profitability and effectivity of its bodily retail community.
The firm expects about 80 shops to fall inside its closure parameters throughout fiscal 2027, adopted by roughly 100 extra areas over the next two monetary years.
The announcement follows an earlier warning in June, when TFG mentioned it deliberate to shut not less than 100 underperforming shops whereas reviewing roughly 300 different underperforming areas throughout its portfolio.
TFG has emphasised that the shop closures are a final resort and that it first considers whether or not particular person areas may be improved or used extra successfully by one other model.
The newest replace additionally reveals that the rationalization is already underway. TFG mentioned it closed 85 shops that have been now not economically viable through the 21 weeks ended Aug. 22, whereas opening 25 new areas throughout the identical interval.
The firm ended fiscal 2026 with 4,914 shops, in contrast with 4,923 a 12 months earlier. Across the total fiscal 12 months, TFG opened 233 areas and closed 242, leading to a web discount of 9 shops.
Management has linked the shop technique to each profitability and the rising significance of digital sales.
“We are closing underperforming and marginal stores and sharpening our brand portfolio,” TFG CEO Anthony Thunström mentioned within the firm’s newest earnings call.
TFG can also be utilizing components of its bodily community to help on-line orders, together with changing chosen retailer house into fulfillment hubs. The strategy permits the retailer to make use of its present footprint to help e-commerce whereas lowering its reliance on conventional retailer house.
The newest retailer reductions come after a troublesome monetary 12 months for the retailer.
According to TFG’s fiscal 2026 results, group income elevated 7.2%, however profitability declined sharply. Operational EBIT fell 22.1%, whereas headline earnings per share dropped 33.5%.
Here’s a few of my previous coverage of retailer closures:
The strain was not merely a results of weaker sales. TFG’s buying and selling bills elevated 10.7% through the 12 months, outpacing income development, whereas gross margin declined to 48.2%.
The firm mentioned buying and selling circumstances deteriorated through the second half of fiscal 2026 as slowing client demand and margin strain affected its enterprise throughout a number of areas.
That mixture makes underperforming stores tougher to justify. Physical areas carry important fastened and working prices, whereas a retailer that generates inadequate gross sales can weigh on margins even when the broader retail enterprise is rising.
TFG’s present technique is subsequently much less about abandoning physical retail altogether and extra about concentrating sources on areas and types that may generate stronger returns.
The firm has additionally continued to handle stock extra carefully, reduce costs, and reassess its model portfolio as a part of that broader effort.
While physical-store profitability stays below strain, TFG’s on-line enterprise has emerged as an necessary supply of development.
Group on-line gross sales elevated 15.3% through the first 21 weeks of fiscal 2027 and accounted for 15.9% of whole group gross sales, up from 13.8% through the comparable interval a 12 months earlier, in keeping with TFG’s newest trading update.
That development helps clarify why TFG is keen to cut back components of its bodily footprint whereas persevering with to put money into its digital and fulfillment capabilities.
The firm’s newest outcomes present that the technique isn’t merely a broad retreat from shops. TFG continues to open new areas the place it sees a possibility, even because it closes stores that now not meet its profitability necessities.
Management mentioned it expects client circumstances to stay difficult within the close to time period and plans to keep up a disciplined approach to credit score, retailer house, and on-line penetration.
The technique provides TFG a strategy to cut back prices related to shops which are now not economically viable whereas investing extra within the digital channels which are driving sooner development.
For the retailer, the problem now’s figuring out which bodily areas nonetheless justify funding and the way a lot of its future development may be supported by its more and more necessary online business.
Related: 102-year-old fashion giant faces 400 store closures
This story was initially revealed by TheStreet on Sep 3, 2026, the place it first appeared within the Retail part. Add TheAvenue as a Preferred Source by clicking here.
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