Fashion retailer TFG (formerly the Foschini Group) continues to scour retail markets around the world for acquisition opportunities and has appointed a dedicated head of mergers and acquisitions. Anthony Thunström, TFG's chief financial officer, said this week that the group would prefer a UK-headquartered business, but was also looking elsewhere."I think the US is too big and we've had some exposure recently through Phase Eight to Australia," Thunström said."There's probably some opportunity in Australia simply on the basis that their retail offerings - their stores, designs - aren't great."TFG brands include Foschini, @home, Markham and American Swiss."I think potentially over time we could look to take some of our brands into Australia, but it's not something we're going to do overnight," Thunström said.Options further afield were also on the radar.story_article_left1"We are continually being brought opportunities from around the world - Mexico, the Philippines, Turkey, for example. However, none of these are things you rush into - we have a very clear set of investment criteria that would need to be satisfied before we even look at something seriously."The group had looked at South America several years ago, but found significant local challenges including a lack of tax transparency, Thunström said.Africa would likely be "back on the boil" in a few years as commodity prices recovered.TFG has been on the acquisition trail for several years, first locally and now internationally. It bought brands such as Fabiani and Totalsports. And last year it bought 85% of UK business Phase Eight for R2.6-billion in a deal which gives it the option to buy the remaining 15% in three tranches in the four to six years after the transaction."The UK retail market itself is not great; it's been immensely challenging over the last two years. Certainly the most recent high street numbers to come out of the UK indicate that many of the categories are going backwards."However, in contrast to the general retail market in the UK, Phase Eight "pretty much hit every single objective for the year", he said.Local apparel retailers are operating in a tough environment. Apart from muted growth and the rising cost of living, foreign brands have entered the market, intensifying competition.Most foreign retailers have been largely in women's fashion, such as Zara, Cotton On and H&M.block_quotes_start We will continue to grow our space in South Africa and surrounding countries between 6% and 7% a year, probably every year for at least the next five years block_quotes_end"The reality is we are fairly well diversified through our 20 brands in South Africa. Foschini is probably our biggest exposure, with their casual and formal ladies' apparel offering contributing approximately 11% of turnover."What competition does do is to make everyone up their game. South African retail compares well on a global level," said Thunström.So what does TFG look for when seeking a business to buy?"First, a business with a solid track record; not a business that is troubled or has brands that are troubled."A lot of businesses come to us, but many teams are looking to take the money and exit.story_article_right2"We bought Phase Eight because they have a strong, committed management team who are committed well into the future."As for concerns around the impact of Brexit and consumer uncertainty in the UK, "we haven't seen any evidence of that in the performance of our UK operations", he said.He said he still saw much growth opportunity in South Africa and the region. "We will continue to grow our space in South Africa and surrounding countries between 6% and 7% a year, probably every year for at least the next five years."We're not anywhere close to the business model of our competitors."TFG has 22 brands (20 in South Africa) and most of the smaller brands have potential for further growth. "The biggest challenge is to prioritise, and capital allocation."It expected about R24-billion turnover this year and was looking at R39-billion by 2021, fuelled by organic growth and acquisitions, he said. There are 3,120 stores in the group and the forecast is to increase that to 4,200 by 2021. Online sales were expected to contribute 5% to 6% of total turnover in South Africa in five years ...