Credit retailer Truworths had a mixed performance for the full year to end-June across its domestic, Africa and UK operations, the group reported on Friday.
Overall group sales increased by 3.6% year on year to R21.4bn.
Its Africa unit saw sales decrease by 3.2% to R14.5bn, affected by challenging economic conditions in SA, while sales in the UK grew by 10.8% to £290.4m (R6.8bn).
Factors affecting Truworths Africa included weak economic growth and high interest rates; high utility and transport costs; high levels of unemployment; port congestion and global shipping disruptions; and warm weather affecting winter sales.
“The late onset of winter in SA, with unseasonably warm weather stretching into late May of the current period, dampened the demand for winter merchandise, consequently affecting retail sales, particularly in the last quarter of the current period,” the company said.
The group is bullish about the UK, with CEO Michael Mark indicating in March that if Truworths made an acquisition, it was likely to be in the UK where it owns the shoe chain Office, which provides a third of its profit and has turned a corner after challenging times a few years ago.
Office, which sells top shoe brands including Birkenstock, Timberland, Nike and New Balance, saw sales increase by 21.8% in rand terms to R6.8bn, bolstered by a strong first-half performance, with sales up 15.6%. Growth slowed to 5.3% in the second half.
Despite economic challenges, branded fashion footwear sales remained resilient, while online sales contributed about 46% of total retail sales, and continued investment in new store development and remodelling resulted in an 11.4% increase in trading space.
Management is optimistic about the future, expecting improved consumer confidence and disposable income due to expected lower interest rates and higher GDP growth prospects.
“Notwithstanding the challenging macro environment in the current period, management is encouraged by early indicators that will support the positive trajectory of consumer confidence in the year ahead. Monetary policy easing will contribute to improved credit demand and affordability while prospects of higher growth and lower inflation are expected to boost consumer disposable income and spending in the medium term,” the group said.
Headline earnings per share (HEPS) are expected to come in at 795c-830c, a decrease of 5%-9% from the prior comparable period. Earnings per share (EPS) are expected to be as much as 19% higher than before.
The variance between EPS and HEPS is mainly due to the reversal of previously recognised Office trademark impairments.
Truworths’ share price was down 2.96% at R97.39 on Friday, but is up 30% so far in 2024.
The group’s audited financial results for the period are scheduled for release on September 12.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.