Foschini boss cagey on UK acquisition

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Foschini CEO Doug Murray did not confirm the group would acquire Whistles, but said: "You can never say that we are not looking into buying Whistles. We look at buying a lot of businesses … can be talking to many companies at any point in time. It’s obviously of a confidential nature what we are doing, with whoever we talk to."

Murray said the investment in offshore markets has been a growth strategy for many retailers looking at increasing their profits outside the South African economy.

"We bought Phase Eight just over a year ago, because we thought it was a good business and it’s got good growth potential. We always said that we would look at some point that if there was enough appropriate growth on, then we would grow something on to that business," Murray said.

Since the Phase Eight acquisition, Foschini reported cash sales rising to 67.4% from the 15.8%, excluding Phase Eight in Foschini’s half-year results ended-September 30 last year.

Kyle Rollinson, an equity analyst at Avior Capital Markets, said in an interview having 100% exposure to SA "weakens your investment case in this sort of market … getting foreign earnings and hard currency earnings is attractive in those markets. South African retailers all have the sight of being a global retail powerhouse … so, they will obviously be prudent in how they go about it."

But for Charles Allen, a London-based senior analyst at Bloomberg Intelligence, SA’s retail sector is as mature as those in developed markets.

"Woolworths acquired Country Road some years ago, but then they brought Country Road to SA as well," he said.

"So apart from acquiring assets outside SA, this may also be ability to bring some of the positions back into SA."

He said Whistles reported sales of just more than £60m and made a small loss of £2.5m in January last year.

Whistles has 49 stores in the UK, with 76 concession stores, which will add to the 107 Phase Eight stores The Foschini Group has. But for Murray, "until something is confirmed, then it is just a rumour".