Business Maverick

RETAIL DEAL

The Foschini Group branches out into furniture with R2.35bn acquisition of Coricraft owner

The Foschini Group branches out into furniture with R2.35bn acquisition of Coricraft owner

Is there a future in furniture? The Foschini Group, or TFG, seems to think so. It has just sealed a deal to acquire Tapestry Home Brands, whose line-up includes the popular Coricraft and Dial-a-Bed offerings, for R2.35-billion.

TFG said in a Sens statement on Monday that the deal with Tapestry Home Brands will herald “exposure to new products and categories as well as new customers that will complement the current TFG customer base in existing categories”. 

“Furthermore, Tapestry’s unique business model, with easily scalable local manufacturing and distribution capabilities, is an excellent strategic fit for TFG. 

“Acquiring this highly cash generative business presents significant revenue opportunities within the TFG ecosystem. In addition, TFG’s retail credit offering and its digital and omnichannel capabilities are expected to substantially enhance Tapestry’s growth and digital transformation efforts,” it added. 

The furniture business is generally regarded as one with “high margins”, which is another way of saying it is often profitable. Ikea comes to mind. 

In South Africa at the moment, it must be noted that furniture is not exactly flying out of the shops. According to the retail trade sales data compiled by Statistics South Africa, textiles, clothing, footwear and leather goods have been leading the retail rebound. In 2021, that retail segment – part of TFG’s traditional offerings – saw growth of 16.4% compared to 2020. Household furniture, appliances and equipment, by contrast, had growth of 2.4%. 

Still, there are trends that support the furniture sector. Many white-collar South Africans are still spending much of their workday at home, and that often requires changes to living spaces. Demand that has been pent up by two years of a draining pandemic has yet to fully uncork, and furniture will be part of any looming consumption binge. 

Tapestry has 175 stores in South Africa, Namibia and Botswana, and its units have brand-name recognition in the region. And its target market is the middle- to upper-income range, which has generally weathered the pandemic and its economic challenges much better than low-income households, with far more disposable income to spare. 

TFG itself has been in solid recovery mode despite setbacks such as the riots in July last year. In the last three months of 2021 – the third quarter of its current financial year – the group posted retail turnover growth of 17.3%. 

It’s certainly not acting like a couch potato when it comes to adding to its asset base and consumer offerings. DM/BM

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