Lacklustre trading update could hit Truworths shares
The share price of clothing chain Truworths is likely to fall on Thursday morning when the market reacts to a lacklustre sales update it issued after the JSE closed on Wednesday.
The retail group reported overall sales for the 26 weeks to December 31 of R10.3bn, nearly flat from the R10.2bn for the 26 weeks to December 25 in 2016.
Sales at its South African operations grew 1% to R7.4bn but that was offset by sales from its UK chain Office declining 1%, measured in rand.
Measured in pounds, Office’s sales grew 1% to £162m from £159m.
The rand strengthening against the pound translated that into a fall to R2.8bn from R2.9bn.
Truworths said it expected to report on February 22 that its diluted headline earnings per share (HEPS) declined by between 3% and 5%.
The retailer said the comparison between this financial year’s first half and the prior year’s first half had been cast in an unflattering light by the inclusion of the slow sales week between Christmas and New Year in this interim result’s reporting period.
If the 26 weeks to January 1 were used for the matching period, it would have shown a 1% sales growth, and the drop in diluted HEPS would have been limited to between 1% and 3%.
Truworths said sales to account holders — presumably customers paying on credit — remained level at half of all sales.
"Gross trade receivables in respect of the debtors book (Truworths, Identity and YDE) declined to R6.3bn from R6.4bn at the prior period-end. The decline in the book is mainly attributable to the improved collections experience since the prior period-end," the sales update said.
"The percentage of active account holders able to purchase at the end of the current period increased to 87% compared with 85% at the prior period-end and 82% at June 2017, while overdue balances as a percentage of gross trade receivables improved to 10% from 11% at the prior period-end."