A retail giant is taking a harder look at its store network as changing shopping habits and weaker profitability force the company to rethink where it invests.
The retailer has already closed dozens of locations this year, and its latest update shows that the pullback from physical stores is not slowing down. At the same time, one part of its business is gaining momentum and helping to shape a more digitally focused strategy.
Founded in 1924, The Foschini Group (TFG) is a South Africa-based multinational retail company with 39 fashion and lifestyle brands and more than 4,900 outlets across five continents. Its portfolio spans clothing, footwear, jewelry, beauty, technology, home goods, and other categories.
TFG confirms more store closures
TFG has confirmed plans to close 180 additional stores over the next three financial years as it works to improve the profitability and efficiency of its physical retail network.
The company expects about 80 stores to fall within its closure parameters during fiscal 2027, followed by approximately 100 additional locations over the following two financial years.
The announcement follows an earlier warning in June, when TFG said it planned to close at least 100 underperforming stores while reviewing approximately 300 other underperforming locations across its portfolio.
TFG has emphasized that the store closures are a last resort and that it first considers whether individual locations can be improved or used more effectively by another brand.
The latest update also shows that the rationalization is already underway. TFG said it closed 85 stores that were no longer economically viable during the 21 weeks ended Aug. 22, while opening 25 new locations during the same period.
The company ended fiscal 2026 with 4,914 stores, compared with 4,923 a year earlier. Across the full fiscal year, TFG opened 233 locations and closed 242, resulting in a net reduction of nine stores.
Management has linked the store strategy to both profitability and the growing importance of digital sales.
“We are closing underperforming and marginal stores and sharpening our brand portfolio,” TFG CEO Anthony Thunström said in the company’s latest earnings call.
TFG is also using parts of its physical network to support online orders, including converting selected store space into fulfillment hubs. The approach allows the retailer to use its existing footprint to support e-commerce while reducing its reliance on traditional store space.
Why TFG is closing stores
The latest store reductions come after a difficult financial year for the retailer.
According to TFG’s fiscal 2026 results, group revenue increased 7.2%, but profitability declined sharply. Operational EBIT fell 22.1%, while headline earnings per share dropped 33.5%.
Here’s some of my previous coverage of store closures:
- Major mall retailer closes more stores in 2026
- Global fashion retailer closing all stores, winding down operations
- Global fashion retail chain closing all stores after 33 years
The pressure was not simply a result of weaker sales. TFG’s trading expenses increased 10.7% during the year, outpacing revenue growth, while gross margin declined to 48.2%.
The company said trading conditions deteriorated during the second half of fiscal 2026 as slowing consumer demand and margin pressure affected its business across multiple regions.
That combination makes underperforming stores more difficult to justify. Physical locations carry significant fixed and operating costs, while a store that generates insufficient sales can weigh on margins even when the broader retail business is growing.
TFG’s current strategy is therefore less about abandoning physical retail altogether and more about concentrating resources on locations and brands that can generate stronger returns.
The company has also continued to manage inventory more closely, reduce costs, and reassess its brand portfolio as part of that broader effort.
TFG’s new retail strategy
While physical-store profitability remains under pressure, TFG’s online business has emerged as an important source of growth.
Group online sales increased 15.3% during the first 21 weeks of fiscal 2027 and accounted for 15.9% of total group sales, up from 13.8% during the comparable period a year earlier, according to TFG’s latest trading update.
That growth helps explain why TFG is willing to reduce parts of its physical footprint while continuing to invest in its digital and fulfillment capabilities.
The company’s latest results show that the strategy is not simply a broad retreat from stores. TFG continues to open new locations where it sees an opportunity, even as it closes stores that no longer meet its profitability requirements.
Management said it expects consumer conditions to remain challenging in the near term and plans to maintain a disciplined approach to credit, store space, and online penetration.
The strategy gives TFG a way to reduce costs associated with stores that are no longer economically viable while investing more in the digital channels that are driving faster growth.
For the retailer, the challenge now is determining which physical locations still justify investment and how much of its future growth can be supported by its increasingly important online business.
Related: 102-year-old fashion giant faces 400 store closures
