Fashion retailer Truworths plans to tighten its operations following a dip in profit margins for the year to end-June.
The group recently reported a slowdown in profit growth during the 2025 financial year weighed down by increased local markdowns and continued investment in its UK business.
Headline earnings per share for the year fell 8% to 752.1c and the group cut dividends by 7.9% to 487c. Gross profit margin narrowed to 51.3% as markdowns and promotions weighed on returns.
Truworths swung from net debt of R306m to net cash of R720m by year-end due to a strong cash generation from operations of R4.8bn. Net asset value per share rose 12% to R28.59.
The group said sales in SA were pressured by weak consumer confidence, subdued wage growth and rising living costs, particularly in the first half of the year.
To counter this, it accelerated promotional activity and refined its merchandise mix while maintaining a cautious approach to credit.
Key Takeaways
- EPS down 8% and dividends cut as local markdowns weigh on margins.
- Net cash of R720m supports growth and strategic investments.
- New distribution centre & UK expansion position Truworths for recovery.
During the period, Truworths completed its new distribution centre in Cape Town which the retailer sees as a game changer. The facility, announced in 2024, allows for more precise merchandise allocation, faster replenishment and better overall inventory control which will help to improve profitability as trading conditions recover.
In the UK, Truworths’ Office brand continued to outperform the broader market with the support of strategic store renovations, expansions, and a strong online platform. Investments in store development and technology are expected to further strengthen the brand’s competitive edge, even amid a challenging consumer environment.
Early signs of recovery remain mixed. In the first seven weeks of the new financial year, the group said it posted a decline in sales compared to the same period last year. Its African business sales were down 3.1%, while the UK business recorded a 3.4% increase.
Truworths has committed R548m in capital expenditure for the 2026 financial year, including R300m for its SA operations and £10m (R238.5m) for Office UK. The group expects trading space to expand by about 3%, with 2% growth in SA and 12% in the UK.
The new distribution centre is central to supporting these plans, allowing the group to positioned itself to emerge stronger as economic conditions stabilise.
“Management aims to unlock growth by enhancing the appeal of Truworths’ aspirational fashion ranges and value proposition through targeted merchandise buying, planning and range building initiatives,” it said.
“These initiatives will be supported by expanding the merchandise offering in categories that support the core merchandise range, leveraging the capabilities of the new distribution centre to enhance product allocation and unlock distribution efficiencies, refining the account and loyalty offering, exploring new real estate opportunities and expanding the online platform.”
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