Foschini Group Ltd (TFGJ.J): Too early to turn positive - Sell maintained

研报英文原文证据摘录

Foschini Group Ltd (TFGJ.J): Too early to turn positive - Sell maintained

Action |

24 Jun 2026 00:00:00 ET │ 21 pages

Foschini Group Ltd (TFGJ.J)

Too early to turn positive - Sell maintained

CITI'S TAKE

We reiterate our Sell rating on Foschini Group and lower our target price to

R61.30. This follows significant cuts to our DHEPS estimates - 23% and 16%

in FY27/28E respectively - placing our estimates well below consensus. Our Sell

caution is driven by elevated inventory levels and aging stock across all Price (23 Jun 26 17:00) R64.70

regions, which heightens the risk of gross profit margin (GPM) compression

(June 26 to March 27) amid weak consumer demand. Furthermore, we see Target price R61.30↓

structural headwinds from employee cost margins that are higher than from R71.00

regional peers, highlighting operational inefficiencies. We expect downward Expected share price return -5.3%consensus revisions and a declining FY27E DHEPS to drive a de-rating of the

forward PE multiple towards ~8x (from ~10x currently) over the next 6-12m. Expected dividend yield 3.1%

Expected total return -2.2%

Cautious Stance on Elevated Inventory Risk — We maintain our cautious outlook Market Cap R21,417M

due to persistent inventory challenges. Elevated inventory levels and aging stock are

US$1,305Maffecting all three operating regions. This backdrop of weaker consumer demand

increases the risk of discounts and gross profit margin (GPM) compression. We

believe recent GPM gains seen in April/May may be offset by these pressures during

the remainder of FY27e.

Price Performance

Regional Pressures Weighing on Margins — We see risks around regional (RIC: TFGJ.J, BB: TFG SJ)

performance. In Australia, the proportion of stocks older than the current season has

increased sharply to 20%.