A major international retailer is preparing for a major revamp of its store network after warning that dozens of stores 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 pressures across the apparel industry, where rising operating costs and lower discretionary spending have weighed on margins even as sales remain resilient.
Consumer purchasing habits continue to evolve as online channels capture a greater share of retail spending. At the same time, shoppers continue to be selective about discretionary purchases, leading many established brands to reevaluate their store networks and invest more in e-commerce and omnichannel capabilities.
Founded in 1924, The Foschini Group (TFG) is a multinational retail company based in South Africa that owns 39 brands spanning apparel, footwear, jewellery, beauty, technology and home goods.
TFG identifies hundreds of underperforming stores
TFG revealed plans to close at least 100 stores over the next fiscal year while reviewing approximately 300 underperforming locations across its portfolio.
However, the company stressed that permanent closures remain a last resort.
“Closing stores is absolutely the last resort after you’ve tried everything else,” TFG CEO Anthony Thunström said in an interview with the Sunday Times. “We’re looking at whether any of our other brands would perhaps be better merchandised in that store, in that location.”
The retailer operates more than 4,900 outlets in 23 countries, with business segments in Africa, London and Australia.
Instead of immediately closing its branches, TFG is undertaking several initiatives to improve profitability. These include optimizing store space, reducing inventory purchases, and leveraging physical locations to support online fulfillment.
“Given the impact of a poor economy on store profitability and the extent of our online penetration, we are closing marginal and underperforming stores and refining our brand portfolio,” Thunström said on the company’s latest earnings conference call.
The retailer also plans to convert parts of select stores into fulfillment centers for online orders as digital sales continue to grow. Management expects tighter inventory controls and better product mix decisions to help support higher gross margins over the next year.
Why TFG closes stores
The retailer’s restructuring efforts come after a challenging financial year.
According to TFG’s fiscal 2026 annual results, the group’s revenue increased by 7.2%, but profitability decreased sharply. Group operating profit fell 22.1%, while headline earnings per share fell 33.5%.
The company said business conditions weakened significantly during the second half of the year, as lower consumer demand during the peak shopping season and lower margins affected results in all operating regions.
Gross margin decreased 120 basis points to 48.2% as the retailer increased markdown activity to clear inventory. At the same time, operating expenses rose 10.7%, outpacing sales growth and putting additional pressure on profits.
A positive point was electronic commerce. Online sales increased 31.7% during fiscal 2026 and now represent 14.8% of total retail sales, and efficiencies of scale help 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, up from 4,923 the previous year. During that period, the retailer opened 233 locations but closed 242, resulting in a net reduction of nine stores.
The store review comes as retailers around the world look to improve profitability by focusing investments on their most productive locations. Across the industry, companies have increasingly prioritized e-commerce fulfillment, supply chain efficiency, customer data capabilities and omnichannel services as online sales continue to account for a growing share of consumer spending.
Here is some of my previous coverage of retail store closures:
Management expects consumer conditions to remain difficult for the foreseeable future.
“We are planning on the basis that consumer conditions will remain under pressure for some time in each of our territories and could deteriorate further until a durable solution to the Iran war is found, inflation cools and consumer confidence improves,” Thunström said during the earnings call.
TFG plans to close at least 100 stores while reviewing approximately 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 market where digital and physical channels increasingly work together.
As consumers embrace online shopping more than ever, retailers are reevaluating how many physical stores they need and how those locations fit into broader omnichannel strategies that combine digital convenience with in-store experiences.
Global e-commerce revenue surpassed $6 trillion in 2024 and is projected to reach $10 trillion in 2033, according to Capital One Shopping.
Despite that growth, physical stores remain the dominant sales channel. Global online sales accounted for approximately 19.9% ​​of total retail sales in 2024, indicating that the majority of purchases are still made in person.
For retailers like TFG, the challenge is finding the right balance between maintaining a profitable store network and investing heavily in digital capabilities that consumers increasingly expect.
“We are enhancing our lending and fintech capabilities with their structurally higher operating margins and returns, we are reducing the complexity of our operating model and, in doing so, structurally reducing our cost of doing business,” Thunström said on the company’s latest earnings conference call.
As e-commerce adoption continues to increase globally, retailers that successfully integrate digital innovation, supply chain efficiency and customer convenience are likely best positioned to navigate an increasingly competitive and rapidly changing retail landscape.
Related: Another retail chain closing all its stores after 33 years in business
This story was originally published by TheStreet on June 9, 2026, where it first appeared in the Retail section. Add TheStreet as a preferred source by clicking here.
