By now, Australian retailer Cotton On would’ve had well over 300 stores in South Africa … if everything had gone according to a plan announced in 2014.

At that point, it had just opened its 100th store inside of three years – making this market its fastest-growing globally. Fast forward nine years and it has fewer than 200 stores across its Cotton On, Cotton On Body, Cotton On Kids, Factorie, and Typo brands.

The Covid-19 pandemic, intense load shedding and a stagnant economy would’ve all played a role in the privately-owned group dialling back its expansion plans in this country.

Still, South Africa remains its third-largest market globally, by number of stores. Australia leads with 662 (at the end of last year), with the US at 194 and South Africa at 169 (New Zealand had 107).

Cotton On, SA Retail sector, Typo, Mr Price, Woolworths

Source: Cotton On

A bland filing with Australia’s securities regulator at the end of October shows just how big its African operation is (large corporates in Australia are required to file audited accounts annually, even if they are not publicly owned like COGI Pty Ltd).

Its financial report for the year to 25 June 2023 shows that Africa revenue for the year was A$183.4 million. At an average exchange rate over the 12 months (R11.96:A$1), this equates to R2.19 billion.

This is down by 6% year on year (from R2.34 billion in FY2022).

In Australian dollar terms, the decline is double at -13% given that the rand was less weak between July 2021 and June 2022 than in this financial year.

Around 95% of its revenue is comprised of retail sales, in other words, sales through its own stores. The remainder is from wholesale sources, which at this point comprises Superbalist and Margins on wholesale revenue will be lower than on its retail revenue.

The group has a handful of stores in Namibia and Botswana (combined), so practically all of these sales are from South Africa.

In Aussie dollar terms, South African (technically ‘Africa’) sales are 8% of total group revenue. This compares to it making up 9.9% in the prior year.

(Much is made of the fact that Cotton On owns the Typo chain, but realistically these stores probably generate an average basket of around a quarter of its clothing stores. They ate CNA’s lunch, and filled that gap, but have a relatively small contribution in the overall picture.)

How does the group compare to other South African retailers?

Total revenue is at about the R26.4 billion mark, with 58% of this – close to two-thirds – still coming from its home market of Australia and New Zealand (there will be some impact from weaker emerging market currencies in the last year distorting this contribution).

That puts the total group at close to twice the size of Truworths Africa, which posted retail turnover of R15 billion for the year (up 9%).

Locally, Cotton On is about twice the size of the Truworths Emporium or Truworths Man Emporium businesses.

These reported revenues for last year of R3.9 billion and R3.7 billion, respectively. Truworths (ladieswear) has 350 stores (Menswear is complicated as there are fewer than 100 standalone stores – the rest are departments).

Woolworths’s Fashion, Beauty and Home division posted nearly R15 billion in turnover last year (R14.762 billion), up 8.9%. That’s across 204 stores in South Africa and a further 64 in the rest of Africa.

Mr Price reported R16 billion in retail sales for the last six months, which is up 6.8% (excluding Studio 88). That’s a massive number (over R35 billion for the full year).

Similarly, TFG Africa, which operates 3 644 stores (more than 3 400 in South Africa), reported turnover growth of 12% to R16.8 billion for the six months to end September (this excludes the impact of the Tapestry acquisition).

Its South African business is about three times the size of Rex Trueform’s Queenspark, a niche retailer that reported retail sales of R708 million last year (similar year-ends). On a store basis, it is twice the size (Queenspark has 98 stores).

Cotton On says: “During the year, over 100 stores were opened outside of Australia, increasing our offshore retail footprint by 15%. Further investment was also made in enhancing Global distribution capacity, with new state of the art facilities designed and constructed in Australia, Africa, Singapore, UK and USA.”

Group profits have slumped 85% (before tax), despite the record sales figure achieved of $2.2 billion. It invested heavily last year in “Australia, Africa, Singapore, the UK and USA”.

In South Africa, it opened a R300 million distribution centre in the Waterfall precinct, being developed by JSE-listed Attacq.

That new 22 000m2 warehouse and distribution centre can process in excess of 6 000 e-commerce orders per day, and 200 000 units to its store base daily, totalling over 20 million units a year. The facility is more than four times the size of its previous one near OR Tambo International Airport