Rex Trueform grows on Queenspark profit

The company's 15.8% growth in revenue and its headline earnings per share growth of 20.9% were solely due to Queenspark as the manufacturing division made a loss.

In the six months to December, the group reported revenue growth of 15.8% from R221m to R256m. Rex Trueform was established in Cape Town in 1937 and has been listed on the JSE since 1945.

Operating profit moved up 11.7% to R14,7m from R13m, while headline earnings per share improved 20.9% to 65.3c from 54c.

Absa Investments analyst Chris Gilmour said on Friday the results were very credible in light of the economic crunch as sales of durables and semi durables came under pressure. As a result, consumers were spending less.

Rex Trueform said its Queenspark retail segment produced “solid results” as turnover increased 20.9%, buoyed by the opening of three new stores. Like-for-like sales, however, still showed an improvement of 11.5%.

Queenspark's operating profit improved 12.8%, compared with the previous corresponding period.

Fashion retailer Truworths, considered by some analysts as a yardstick, last month reported revenue up 10% to R3,7bn, while profit before tax was up 11% to R1,2bn in the same six-month period. Headline earnings per share increased 16% to 184.7c.

In last year's annual report, the company said it continued to invest in new stores and had opened seven last year, a 13% increase in space. Queenspark now has 48 stores in SA, as well as one in Namibia and one in Botswana.

However, the manufacturing division made a loss as a result of lower volumes at the Atlantis factory, the only remaining Rex Trueform factory after the unprofitable Salt River operation was closed.

The division made a R766,000 loss, which is likely to widen over the year as further reductions in orders are expected.

Last year, CEO Catherine Radowsky said the “socioeconomic environment in this area remains problematic with unacceptable levels of absenteeism and an unstable workforce”.

“The interventions which were made last year with regard to absenteeism have not been successful, in that this remains at an unacceptably high level,” she said in the company's annual report for the past financial year.

Queenspark said the trading environment remained difficult as the downturn in consumer spending was expected to take further hold. “As a consequence, the second half-year performance presents a considerable challenge and will moderate the results for the full financial year to June 2009,” the company said.

Source: Business Day

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