Truworths had a consumer recovery this year, and it lasted a matter of days. The retailer told the market on Thursday 13 August that group retail sales for the 52 weeks to 28 June fell 0.9% to R21.8 billion, against R22.0 billion a year earlier, and that earnings per share would land 2% to 4% lower, at 715c to 730c versus 745.2c. Headline earnings per share, the cleaned-up profit figure JSE-listed companies must report, falls by the same 2% to 4%, at 722c to 737c against 752.1c. The share price rose 5.13% that day to R54.95, its biggest move in about four months.
A recovery overtaken within days
The company's account of the year is unusually specific about when it turned. The second half opened on a more constructive footing: moderating inflation, the prospect of further interest rate relief and a favourable reception for the national budget in late February all pointed towards a recovery in consumer confidence. Within days, Truworths says, that outlook was overtaken by external events, as escalating conflict in the Middle East drove global oil prices sharply higher and renewed inflationary pressure, and the higher fuel costs that followed weighed on the disposable income of consumers who had only just started to feel some relief.
The credit book shows the squeeze. Active account holders able to purchase fell to 77%, from 79% a year earlier, while gross trade receivables on the active portfolio edged up 0.6% to R6.5 billion and overdue balances held at 17% of the book. Account sales stayed at 46% of group retail sales, and the group tightened its credit-granting approach even as demand for its aspirational merchandise grew.
South Africa down, the United Kingdom up in pounds
Truworths Africa, which also owns Daniel Hechter, Naartjie and Earthchild, saw retail sales fall 2.1% to R14.2 billion, with cash sales down 5.0% and online sales up 21.5% to 8.1% of segment sales. Office, the UK shoe chain, grew retail sales 4.9% in sterling to £334.1 million, but only 1.3% in rands to R7.6 billion, because its second-half sales were translated at an average of R21.90 to the pound against R23.97 the year before. Office grew trading space 17.8% year on year.
The audited results are scheduled for release on or about Thursday 27 August.
