Fashion retailer Foschini witnessed a 6.3% decline in diluted headline earnings per share from 553 cents to 518.2 cents for the year ended March.

This was notwithstanding a 6.4% growth in retail turnover to R8.6 billion, with total turnover increasing from almost R10 billion to R10.78 billion.

The group declared a final dividend of 170 cents per share, which brought the total dividend for the year to 288 cents per share, which was unchanged from last year.

"This financial year has been difficult and volatile with consumer spending worsening during the second half of the year, particularly in the mass middle market space.

"The significantly higher than projected unemployment figures have also had a negative impact on this sector," the group lamented.

Although interest rates and inflation continued to fall, this did not translate into increased consumer spending, which remained under pressure, it added.

Gross margins for the year were down marginally by 0,2% on the previous year which was primarily due to Christmas trading being at the lower level of management expectations.

"In line with our strategy of investing for the longer term, the group continued to grow trading space in the second half by opening a further 41 stores.

"100 stores were therefore opened for the full year, whilst 12 stores were closed. At the year-end the group was trading out of 1 627 stores, with an increase in trading area of 8.1% compared to the previous year," Foschini said.

After a strong first half performance, clothing growth slowed in the second half resulting in a total growth of 8.3% for the year.

While growth in jewellery sales was negative, this performance in the current economic climate is acceptable when compared to the market both locally and overseas.

The first half growth was -3.0% improving to flat in the second half.

Cosmetics continued to perform satisfactorily.

Homewares and furniture performed adequately in a competitive market. Cellphone sales improved substantially in the second half as the supply issues experienced in thefirst half improved.

Looking ahead, Foschini said that retail turnover for the first eight weeks of the new financial year has been encouraging, with an upward shift in consumer spending.

"The 2010 World Cup which gets underway in a few weeks' time should create more positive consumer sentiment, which together with the reduced interest rate and inflationary environment should improve consumer spending.

"However, the effect of the increase in the cost of electricity on the disposable income of our consumers is unknown.

"In addition, unemployment and associated factors in our economy remain as a potential risk, as do the ongoing problems in international markets.

"In line with our strategy of investing for long-term growth, we will continue to open new stores in certain of our formats that are under-represented and we anticipate opening in the region of 100 new stores in the year ahead, which will increase trading space by approximately 7%," the group added.