Truworths wears smile in difficult conditions

The group said yesterday that despite a challenging trading environment during 53 weeks to June, it increased headline and earnings per share 19% to 295,6c.

Operating profit rose 16% to R1,9bn, with the operating margin maintained at 33%.

A final cash dividend of 72c a share was declared, bringing the total payout to shareholders for the year to 144c, an increase of 20% over last year.

CE Michael Mark said trading conditions had become difficult during the year following five interest rate hikes and the rising cost of living due to food price inflation and a rising fuel price.

The flagship Truworths brand contributed R3,7bn to sales, with Truworths Man contributing R981m.

Daniel Hechter posted a 28% increase on sales for the prior period to R718m and Identity rose 36% to R685m. Sales at Uzzi rose 35% to R111m while agency sales at YDE were 20% higher at R241m.

The group continued to grow market share, based on figures from the retail liaison committee. Market share in ladieswear rose from 20% to 21%, while the share of the menswear market grew from 16% to 18%.

Following the opening of 17 Truworths, 13 Identity, 10 Uzzi menswear fashion chain stores and two YDE stores, and the closure of seven stores, trading space for the year rose 9%.

At the end of June the group had 452 stores in southern Africa and 24 franchise stores in Africa and the Middle East.

During the year the group exercised its option to acquire the 49% minority interest in Uzzi for R65m and now owns 100% of the stores.

Uzzi has 35 stand-alone menswear stores and has been integrated into Truworths stores.

In a tightening credit environment the group continued to apply its standard credit granting criteria and 60% of new account applications were rejected during the year.

Nevertheless its active account base grew 6% to 1,8-million customers.

The debtors' book grew 12% and credit sales accounted for 70% of retail sales. Net bad debts as a percentage of the book grew to 11,3%.

However, Mark said the additional interest income earned on the debtors' book had offset the increased net bad debts and associated costs.

Management remained satisfied with the quality of the debtors' book, Mark said.

It was committed to investing in the longer term growth and expected trading activity to yield satisfactory earnings growth next year.

Source: Business Day

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