(Bloomberg) — The Foschini Group Ltd., an acquisitive Cape Town-based retailer, sees its latest deal as one that will help it cut costs and reduce the time from order to arrival for sofas and other large household items.
TFG, the owner of chains including Foschini, @home and Total Sports, has been increasing its investment in South African clothing manufacturers for a few years — both to reduce a dependency on Chinese imports and secure a supply chain thrown into disarray by Covid-19 restrictions.
Now, it’s expanding that strategy through a 2.35 billion rand ($153 million) bet on a local producer of furniture. TFG said Monday it will purchase Tapestry Home Brands Ltd., the South African owner of the Dial.a.Bed, Coricraft and Volpes chains.
“If you look at sofas in particular, and big furniture that comes with 40-foot containers, the price of those have gone up more than tenfold over the last nine to 12 months — and all this with very long lead times,” TFG Chief Executive Officer Anthony Thunström said in an interview. “What Tapestry gives us almost overnight is an ability to localize a lot more.”
About half of the items Tapestry sells are made and delivered within five to six weeks from order, Thunström said.
Under the ownership of private-equity firms Westbrooke Alternative Asset Management Pty Ltd. and Actis LLP, Coricraft’s furniture factories were reduced to just one in Cape Town. This site has struggled to keep up with demand and TFG plans to spend about 25 million rand on two cutting machines that will “seriously enhance the production capacity,” Thunström said.
“In the private equity world, they wouldn’t have spent that 25 million rand, for us that’s business as usual,” he said. “We’re prepared to fund future growth as opposed to just the initial phase.”
The Tapestry chains will also benefit from TFG’s experience in retail credit and online operations, he said. TFG’s newly improved e-commerce platforms will be released in June or July and “suddenly Coricraft, Volpes, Dial.a.Bed and The Bed Store are going to be front and center” of that launch, he said.
TFG also plans to add more physical shops by doubling the number of Volpes stores to about 100 outlets and bringing The Bed Store to a similar number of shops from its current 17 outlets within three years, he said.
The retailer’s shares dropped 3.4% as of 4:09 p.m. in Johannesburg, as the benchmark South African index fell 1.1%.
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