The Foschini Group Ltd., a South African clothing retailer, posted full-year profit that beat estimates as an increase in cash sales helped offset weaker consumer confidence and retail spending.
Earnings per share excluding one-time items rose 6 percent to 9.03 rand in the 12 months through March, the Cape Town-based company said in a statement today. That beat the 8.86-rand average estimate of 14 analysts surveyed by Bloomberg. Sales gained 10 percent to 14.2 billion rand ($1.4 billion).
South African retailers are targeting customers who spend cash rather than make credit purchases in order to reduce the possibility of non-payment. High unemployment and inflation that has breached the central bank’s 6 percent target has hurt retail sales growth, which slowed to 1 percent in March from 2.3 percent the previous month.
“We want to be in a position where we can weather the poor credit cycles better and still take advantage of a strong credit cycle,” Chief Executive Officer Doug Murray said by phone. “So there is thought behind that drive” of trying to increase cash sales to 50 percent.
Foschini shares rose 3.1 percent to 111 rand by the market close in Johannesburg, extending their gains for the year to 16 percent. The 11-company FTSE/JSE Africa General Retailers Index has advanced 4.9 percent in 2014.
Cash sales increased 16 percent and made up 42 percent of total sales, up from 40 percent a year earlier. This may climb to 45 percent in fiscal 2015 and the company is planning to increase it to 50 percent in the next three years, Murray said.
Lewis Group Ltd., a furniture and electrical-goods retailer that sells mostly on credit, yesterday posted a drop in full-year profit as prolonged mining-industry strikes caused gross domestic product to shrink in the first three months of 2014. Mr Price Group Ltd., a clothing and household-goods retailer that targets mid-to-high-income customers, this week said full-year profit gained 22 percent as it focused on customers paying in cash.