Allan Gray has been doing its clothes shopping on the JSE. Truworths disclosed last week, in a stock exchange filing, that the asset manager's interest in the retailer had reached 10.02%, up from 5.25% on 19 January. It got there in sporadic purchases, and in about eight months it has doubled its stake. The buying goes back at least to 19 January, when S&P Capital IQ records Allan Gray completing the purchase of a minority stake.
The timing is what stands out. From the start of 2025 to 21 September this year, the Truworths share price fell 59%. It had company: Mr Price lost close to half and Pepkor more than a third over the same stretch, and TFG fell furthest of all, down 70%. Allan Gray bought into the slump, not after it.
Cheap on paper, with cash coming in
The fall has left Truworths cheap by the two yardsticks investors reach for first. At R42.21 a share, News24 worked out, a buyer is paying less than six times the company's yearly earnings. Put plainly, if Truworths kept earning what it earns now, its profits would cover the price of the share in under six years. The other yardstick is the dividend, and at that price it comes to more than 11% of what the share costs, every year.
Those earnings have not dried up. In its year to June, Truworths said its operations brought in R4.2 billion in cash, and it paid shareholders R4.74 a share on core earnings of R7.27 a share. The dividend alone took close to two-thirds of those earnings.
Three decades of the same boss
What Allan Gray is buying is not a company halfway through a makeover. Michael Mark has been chief executive for more than three decades, and Truworths' investor pages list him as executive chairman as well, with the company since May 1988. Its recent results have not set anything alight either, as News24 pointed out.
That leaves the share price to do the persuading. News24 reads the buying as a bet that the retailer is due for a recovery after the sell-off. To get back to where it started 2025, the share would have to more than double.
