How the Businessman Who Owns Foschini Lost His Shirt Due to New Affordability Regulations

Foschini Group is a South African owned retail clothing group, that trades under many brands and has over 3,000 outlets across its distribution network. It is headquartered in Parow, near Cape Town. The Company’s main product offerings are casual wear such as trousers, shirts, tops and dresses, children’s wear such as jumpers, tees, hoodies, jeans and dresses, lingerie, swimwear, beach wear and sports wear. The company also deals with accessories, shoes and kids’ wear. The manufacturing and retail of these products is done at its factory in Clifton, Johannesburg.

foschini

The retail brands manufacture and sell a variety of products under the following segments: Belts & Trunks, Kids Clothes, Cuisine, Fashion Accessories, Footwear, Hats, Shoes, Swimwear, Jewelry, Baby Clothing, Formal Wear and Cosmetics. The foschini business division comprises of four business units: Belts & Trunk division, Kids Clothes division, Cuisine division and Fashion Accessories division. Belts & Trunk division comprises Belts, Kids Clothes, Cuisine, Fashion Accessories, Footwear and Jewelry. The Kids Clothes segment manufactures children’s wear such as jumpers, jeans and tops. The Cuisine division manufactures grocery apparels such as grocery bags, lunch packets, plates and cutlery. The Fashion Accessories Division manufactures accessories for women such as jewelry, handbags, sunglasses, cosmetics, perfume and shoes.

As per the latest records, Foschini has an average market share of approximately 42% in overall merchandise sales in SA. In addition to this, it has significant market shares in certain key markets such as Gauteng, Free State, Orange Free State, KwaZulu-Central, Northern Cape and Free State. The following deputy information is being furnished to assist company owners to analyze the performance of their company through the financial data as provided by the Annual Composition Report filed by the company:

Revenue and Gross Margin: As a holder of Foschini Retail Brands, the primary objective of the company is to maximize sales and maximize its profit margin. This objective was achieved in the first half of the year, when the Company experienced an increase in average dio and gross margin. As a result of these factors, the gross margin improved and the revenue increased. The above factors are expected to be repeated over the next few years.

Number of Accounts receivable: During the first half of the year, the number of accounts receivable was found to be lower than the total number of accounts receivable. The reason behind this could be that there were fewer customers to be taken care of, since most of the customers were paying for the same goods from different vendors. Moreover, during the first half of the year, the demand for Foschini items was not as great as it is right now. As a result of these factors, the Company was able to reduce the number of accounts receivable, thereby reducing the cost of the Company’s liabilities.

Income from continuing operations: During the second half of the year, despite the lowering in the number of accounts receivable, the income from continuing operations of Foschini Group was still found to be satisfactory. This could be attributed to the fact that Foschini did not charge consumers for its products. Most importantly, the payment of invoices from the customer has been completed, even if there were no sales made during the period of time.

These issues will be addressed and solved during the next couple of months. In the meantime, it is important for Foschini to continue developing products that will attract consumers from the African continent. The success of the company as a whole relies on how well they are able to retain and grow their market presence in this part of the world. Finally, it is important for customers to understand the new affordability regulations. In this way, they will know what is going on, especially if they want to purchase Foschini products or if they have any questions regarding the Company’s practices.