Clothing retailer Truworths is set to shell out R591m, the bulk of which will go to its distribution centre, the opening of new stores and the refurbishment of some of its existing outlets.
The owner of Uzzi, Earthchild, Naartjie, Identity, Young Designers Emporium and UK-based footwear brand Office did not disclose the number of stores it wanted to open but said it planned to grow its trading space by 1% in the 2025 financial year.
Truworths has 802 stores, most of them Truworths, with 353 outlets, followed by Identity, with 254. In the year to June, Truworths opened 20 new stores and closed 13.
Over the past few years, competitors TFG and Mr Price have opened hundreds of stores a year across all their brands, including fashion, homeware and furniture. "We are finding opportunities [for new stores] because we are doing well. We are opening in areas where we previously closed because there are opportunities," said Truworths CEO Michael Mark.
"We have not disclosed specifics, but we will assess opportunities across all brands, including for our new brands, Sync and Fuel, as well as expansion opportunities for our Identity megastore concept. We will also continue to roll out our Truworths Re-imagined store concept in selected locations. With Office, we will open a number of new stores in the year ahead, and we will continue to renovate and expand existing stores in key locations." Mark said.
As part of its product expansion, Mark said the company would also focus on categories showing "exceptional opportunities for growth". He did not disclose these categories.
The R1bn new distribution centre, expected to be fully operational by March 2025, will boost Truworths’ local manufacturing and improve its ability to respond quickly to trading patterns.
About 55% of its apparel is imported, either through agents or Truworths’ international sourcing division. The remainder is manufactured locally, either directly through local manufacturers or via a network of design centres, including the group’s own.
"We have in-house design that can react quickly and design quickly. We have local manufacturing of 45%-50% on our doorstep and pretty much exclusive to us," Mark said.
"We are in a much better position to take advantage of core replenishment and quickly respond to demand in fashion products. Over the next two to three years, this should come through in our numbers."
In its results for the financial year to June, released two weeks ago, Truworths reported a decline in sales across all its categories in Africa. However, online sales in South Africa rose 34% and now represent 5% of total sales in Truworths Africa operations.
Mark said the group did not have a target for its online sales contribution, but "we continuously enhance our websites, and our full merchandise offering is available online, which means we are positioned for further online growth".
"We expect our online sales growth will continue to surpass total store sales growth for at least five years."
TFG’s e-commerce platform, Bash, grew turnover by 44.4% in the year to March and now contributes 4.2% to retail turnover. At Mr Price, which has more than 2,900 stores, online sales made up 2.1% of total retail sales.
On local retailers bearing the brunt of the popularity of Chinese online retailers such as Shein and Temu, Mark said South Africa had seen many new international retail entrants over the years, and they had enjoyed varying degrees of success for various reasons.
"What makes them different is whether the playing fields are level," he said.
"How successful these new online players will be remains to be seen. Their products are cheap, they use good intelligence to enhance their products based on consumer needs, [and] they have large marketing budgets and very good distribution capability. But they don’t offer a credit model, and they don’t have the strong brand portfolio we have. They also don’t have a store presence in the top malls in the country."
Investment analyst Chris Gilmour said that compared with its rivals Truworths was tiny when it came to sales store footprint and was predominantly a credit retailer. However, Truworths’ strength was its credit facilities, and "it is highly disciplined in its credit-granting, and that has been the main reason for its success over the years", he said.
In the year to June, Truworths said it received 5.3-million credit applications, and the company has 2.9-million active account customers. Account sales contribution was consistent with the 2023 financial year at 70% of retail sales.
Truworths has a market capitalisation of R45bn, with Mr Price at R68bn, TFG at R52bn and Woolworths at R64bn.
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