The Foschini Group Ltd., one of South Africa’s largest apparel and homeware retailers, has started formal talks to cut office jobs as weak consumer demand and a sharp shift toward online shopping squeeze the business.

The Cape Town-based group, which owns brands including Foschini, Markham, Sportscene, and Jet, notified employees last week that it has opened consultations under Section 189A of South Africa’s Labour Relations Act. The legal process covers potential retrenchments across regional and head office positions, though front-line store workers are not part of the talks.

Foschini Group restructuring targets corporate overhead cuts

Whether the cuts will reach Foschini Group’s clothing and furniture factories remains unclear. The company has not stated how many corporate roles are on the line. “Where roles are affected, we always follow a consultation process,” Foschini Group said in a statement.

“These are proposals, not decisions, and we will follow the appropriate due process. Our priority is to protect employment wherever possible, including redeployment into suitable roles across the group,” the Foschini Group said.

The job consultations come as Foschini Group aggressively curbs spending following years of heavy expansion. In its latest annual report, management warned of tight caps on capital expenditure, leaner inventory targets, and direct reductions to corporate overhead.

Under an internal plan dubbed Project Vela, the retailer is reorganizing its 39 brands into operational units to cut management layers. Smaller, lower-margin labels are being merged into larger divisions to lower operational expenses.

TFG shares drop 37 percent on closure plans

The corporate belt-tightening directly mirrors cutbacks in its physical network. TFG plans to close more than 100 underperforming locations over the next year after earmarking roughly 300 stores for review.

The retreat from brick-and-mortar locations follows a quick shift in how its customers shop. The company’s digital storefronts now bring in revenue equal to more than 300 physical shops, making large store footprints increasingly expensive to run.

Financial markets have reacted sharply to the slowdown. TFG shares hit a 16-year low on July 27, erasing more than $600 million in market value as higher costs and soft consumer spending hit margins.

The selloff has deepened in recent weeks. The stock is down more than 37 percent since the start of the year, bringing the retailer’s market value down to R17.28 billion from R27.6 billion ($1.64 billion) on Jan. 1.