Group to feel loss of import credits

8 Mar 2011

The scrapping of a credit certificate scheme that gives relief to importers on customs duty will affect Rex Trueform Clothing's margins in the second half of the financial year, the company says.

Analysts have said the scrapping of the scheme could hurt other retailers that use the credits to import goods.

Rex Trueform, a manufacturing and retail company that owns J Crew and Queenspark, said on Friday, 4 March 2010, that, although the six months to December had shown good growth, the second half would be more difficult.

"In particular, the material benefits provided by the duty credit certificate scheme are no longer available from the beginning of January. This, with expected inflationary pressures, will result in pressure on margins."

The certificate scheme was implemented to enable Southern African Customs Union companies to become internationally competitive. Under the scheme, for every R1 of textile goods exported, the exporting party earned the right to import an equivalent product at a reduced duty rate.

Rex Trueform said a 54% operating profit rise was due to improvements in core retail activities as well as the manufacturing and property segments.

Source: Business Day