Foschini profit up 6%, outpaces consensus

(Reuters) – South Africa's third-largest apparel retailer Foschini Group beat forecasts with a slight 6 percent rise in full-year profit on Thursday as debt-laden shoppers chased after its budget-friendly but low-margin merchandise.

Foschini, which also sells jewellery and furniture, said diluted headline earnings per share totalled 903 cents in the year to end-March, a touch above the 887 cents estimate in a Reuters poll of 13 analysts.

Headline EPS is South Africa's most widely watched profit gauge that strips out some one-off and non-trading items.

Sales rose 9.8 percent to 14.2 billion rand ($1.4 billion), with cash sales growing by 16 percent while purchases on credit inched up 5.7 percent.

Foschini has tightened its criteria for granting store credit cards in response to higher fuel prices, unemployment and debt write-offs that have hit both retailers and banks in Africa's second-largest economy.

The company, which competes with Mr Price and Truworths, raised the money set aside to cover customer defaults by 20 percent to 720 million rand.

Mr Price, a largely cash-based retailer whose market value has recently shot past both Foschini and Truworths, posted double-digit rises in both sales and profit earlier this week, as consumers flocked to its no-frills stores.

($1 = 10.4987 South African Rand)