TFG – Higher Costs with Benefits

We note increasing concerns regarding its high cost structure and argue that while its portfolio of 22 different chains may have led to a duplication of divisional management structures, this diversified offering may be one of the reasons TFG absorbed most of the market share lost by its ailing competitor Edcon. We find that there are changes to its store size profile which we think may reduce its expense to sales ratio.
We consider the proposed acquisition of Hobbs UK, and assess the impact this may have on the group.