The Foschini Group Ltd., one of South Africa’s largest apparel and homeware retailers, plans to close about 280 stores across Africa by 2029 as it shifts more of its business online, where sales are growing much faster than at its physical outlets.

The Cape Town-based retailer said about 80 stores are expected to close in the fiscal year ending in March, followed by another 100 closures in each of the next two years. The plan comes as TFG reviews stores that are no longer generating enough sales to justify their costs.

Foschini restructures stores as online sales rise

Foschini had closed 85 stores it deemed no longer economically viable in the 21 weeks through Aug. 22, the company said. Sales at its African stores rose 0.2 percent during the period, while online sales jumped 54 percent, helped by the Bash platform, which sells products from brands including Sportscene, Totalsports, Markham, Fabiani, @home, American Swiss and Exact.

“The global consumer is expected to remain under pressure in the near term,” Foschini said. The company said it would take a “disciplined approach to credit extension and space optimisation” while working to increase the share of sales generated online.

Foschini online sales reach new high

The shift comes as South African retailers contend with weak consumer spending and an economy that has grown by less than 1 percent a year on average for more than a decade. High unemployment has also left shoppers more focused on price and value.

Online sales now account for almost 16 percent of Foschini’s total sales, up from about 14 percent a year earlier. The retailer has more than 3,400 stores in South Africa, its largest market, across brands that include Foschini, Markham, Sportscene and Jet.

Foschini cuts orporate jobs amid retail slump

The store closures are being accompanied by cuts to corporate jobs. After identifying about 300 positions for review in August, Foschini began formal consultations with employees over potential layoffs at its regional and head offices. The process, conducted under Section 189A of South Africa’s Labour Relations Act, does not affect frontline store workers.

Investors have responded to the weaker retail environment. Foschini shares fell to a 16-year low on July 27, wiping more than $600 million from its market value as higher costs and weaker consumer spending pressured margins. The decline has continued since then. Foschini shares are down more than 35 percent this year, reducing the company’s market capitalization to about R17.84 billion ($1.11 billion), from R27.6 billion ($1.64 billion) at the start of the year.