The global retailer is preparing for a major overhaul of its store network after warning that more locations will close and hundreds more are under review.
The company’s latest results show a business facing increasing profitability challenges despite continued revenue growth. Its performance reflects broader pressure across the apparel industry, where rising operating costs and soft discretionary costs have weighed on margins as sales remain strong.
Consumer shopping habits continue to change as online channels take up a larger share of retail spending. At the same time, consumers are always choosing to buy voluntarily, which is causing many established companies to re-evaluate their store networks while investing heavily in e-commerce and omnichannel capabilities.
Founded in 1924, the Foschini Group (TFG) is a South African retail company with 39 brands including clothing, footwear, jewelry, beauty, technology, and home goods.
TFG identifies hundreds of underperforming stores
TFG has revealed plans to close at least 100 stores in the next financial year while reviewing around 300 underperforming locations across its portfolio.
However, the company stressed that a permanent shutdown is still a last resort.
“Closing stores is a last resort when you’ve tried everything else,” said TFG CEO Anthony Thunström in an interview with the Sunday Times. “We’re looking to see if one of our other brands might do better in that store, in that location.”
The retailer operates more than 4,900 stores in 23 countries, with business divisions across Africa, London, and Australia.
Rather than quickly closing locations, TFG is pursuing several measures to improve profitability. These include optimizing the store environment, reducing inventory, and using physical locations to support online fulfillment.
“Given the negative economic impact on store profitability and our online penetration rate, we are closing underperforming and smaller stores and sharpening our product portfolio,” Thunström said on the company’s latest earnings call.
The retailer also plans to convert portions of select stores into online order fulfillment centers as digital sales continue to grow. Management expects tighter inventory management and improved product mix decisions to help support higher gross margins next year.
Why TFG is closing stores
The retailer’s restructuring efforts come after a challenging financial year.
According to TFG’s 2026 financial results, the group’s revenue increased by 7.2%, but profit decreased significantly. The group’s operating profit fell by 22.1%, while earnings per share fell by 33.5%.
The company said trading conditions weakened significantly during the second half of the year as soft consumer demand during the peak shopping season and low margins moderated results across all operating regions.
Gross margin fell 120 basis points to 48.2% as the retailer increased markup activity to clear inventory. At the same time, operating expenses rose by 10.7%, outstripping sales growth and putting further pressure on earnings.
One bright spot was e-commerce. Online sales increased by 31.7% during fiscal 2026 and now account for 14.8% of total retail sales, with scale performance helping to improve digital profitability.
The store count data also highlights TFG’s increasingly cautious approach to expansion. The company ended the fiscal year with 4,914 stores as of March 31, 2026, compared to 4,923 a year ago. During that period, the retailer opened 233 locations but closed 242, resulting in a total reduction of nine stores.
The store update comes as retailers around the world seek to improve profitability by focusing investment in their most productive areas. Across the industry, companies have increasingly prioritized e-commerce fulfillment, supply chain efficiency, customer data capabilities, and omnichannel services as online sales continue to represent a growing share of consumer spending.
Here are some of my previous store closing reports:
Management expects consumer conditions to remain challenging for the foreseeable future.
“We plan on the basis that consumer conditions will remain under pressure for some time across our region and may deteriorate until a firm resolution is found on the Iran war, inflation cools, and consumer sentiment improves,” Thunström said during the earnings call.
TFG plans to close at least 100 stores while reviewing nearly 300 underperforming locations across its portfolio.Shutterstock
The shift to e-commerce continues to reshape retail
TFG’s approach shows how retailers are adapting to a marketplace where digital and physical channels are increasingly working together.
As consumers embrace online shopping more than ever, retailers are reassessing how many physical stores they need and how those locations fit into broader omnichannel strategies that include digital convenience and in-store experiences.
Global e-commerce revenue exceeded $6 trillion by 2024 and is expected to reach $10 trillion by 2033, according to Capital One Shopping.
Despite that growth, physical stores remain the dominant sales channel. Global online sales will account for approximately 19.9% of total retail sales by 2024, indicating that most purchases will still take place in person.
For retailers like TFG, the challenge is finding the right balance between maintaining a profitable store network and investing heavily in the digital capabilities that consumers continue to expect.
“We are developing our fintech and credit capabilities with higher operating rates and returns, reducing the complexity of our operating model, and in doing so, structurally lowering our cost of doing business,” Thunström said on the company’s recent earnings call.
As e-commerce adoption continues to grow globally, retailers that successfully combine digital innovation, supply chain efficiency, and customer convenience are likely to be better positioned to navigate a rapidly changing and increasingly competitive retail environment.
Related: Another grocery chain closing all stores after 33 years in business
This story was originally published by TheStreet on Jun 9, 2026, where it appeared first in the Marketing category. Add TheStreet as a favorite source by clicking here.
