Truworths' half-year profit jumps 32%, recovering to pre-Covid levels

Source: Reuters/Mike Hutchings

The global apparel industry is recovering from a punishing 2020, when shops were forced to close to prevent the spread of Covid-19 and consumers switched formal dresses and shirts for sweat pants and loungewear.

By 14.16 GMT, Truworths shares were up 8.17% to R64.21, on track for their biggest daily jump in close to nine months.

The retailer, which also owns UK-based shoe chain Office, said headline earnings per share, the main profit measure in South Africa, rose to 448.6 cents in the 26 weeks ended 26 December from 339.3 cents in the same period a year earlier. It declared an interim dividend of 300 cents, up 29.3%.

South African retail sales up 3.1% in December

17 Feb 2022

"The group's profitability in the current period has recovered to pre-Covid levels, and as a consequence we report the highest half-year trading and operating profit performance in the group's history," Truworths said.

The retailer, which also sells homeware, said group trading and operating profit jumped 41.3% to R2.2bn and 32.5% to R2.5bn, respectively.

Group retail sales rose by 2% to R9.9bn, with sales for Truworths Africa up 1.4%. Meaningful sales growth was hampered by civil unrest in July, which resulted in some Truworths stores in South Africa being looted and damaged.

Sales in UK-based Office rose by 3.9% in rand terms.

Lower inventory levels

Like its peers, Truworths had been struggling with supply chain disruptions which resulted in "unusually lower than planned inventory levels which in turn caused some lost sales during November and December," key trading months including Black Friday and Christmas, it said.

On the plus side, these shortages together with demand from shoppers led to a much reduced season-end stock carryover and therefore lower markdowns and higher gross margin of 53.6%, up from 51.5%, it added.