By Larry Claasen
SPECIALITY lifestyle and apparel retailer TFG is investing R65-million into Tapestry’s Home Brands factories.
The arrangement with TFG will allow Tapestry to access R40-million in Industrial Development Corporation (IDC) funding to expand its factories.
The investment in Tapestry’s factories follows TFG, whose brands include Foschini, Ameri can Swiss, @Home, @homelivingspace, Jet Home and Markham, investing R1-billion in building up its own in-house clothing production facilities over the past few years.
TFG bought Tapestry, the owner of brands like furniture retailer Coricraft, branded bedding retailer Dial-a-bed, and home textile retailer Volpes, in March 2022.
At the time of the takeover, Tapestry not only had 175 stores but also several factories, enabling it to vertically integrate its supply chain.
This ability to supply locally made goods from its own factories is “a key success driver of their business model,” said TFG CEO Anthony Thunström at the group’s half-year to end September 2023 results.
Its vertically integrated supply chain was one of the main reasons TFG bought Tapestry, as it could supply its own brands with products.
Thunström said the integration of Tapestry’s factories was proceeding well, as it moved “a substantial portion” of its @Home lifestyle chain’s sofa production to its factories.
Though the takeover only took place last year, the impact of this move has already been marked.
“These locally produced sofas can now be sold for 15% less than what was previously possible at a time when customers were taking strain.”
The move has also been good for TFG’s bottom line.
He added: “At the same time, improving our sofa GP [gross profit] margins by up to 5% and reducing our working capital cycle by 20 days.”
Thunström said the localising of production of @Home’s sofas was only started a few months ago but should reach 50% of @Home’s volumes by the end of March 2024, and that it should reach 70% by the end of March 2025, “with other categories to follow.”
Aside from sofas, which fell under upholstered furniture, TFG now also had factories that made mattresses, household textiles, duvets, and pillows.
At the time of the purchase of Tapestry, TFG said: “Opportunities exist to further leverage the strength of the manufacturing and sourcing capabilities of both businesses and to continue developing local procurement in a segment dominated by imported goods.”
TFG said in its 2023 annual report that its “medium-term ambition remains to significantly ramp up our Quick Response manufacturing.”
The group made no attempt to hide its ambitions in the report.
“This is a bold goal with clear economic and market share benefits, and we remain on track, increasing the number of units manufactured this year to 16,1 million,” it added.