Sagging economic sentiment in SA and UK hurts Truworths’ earnings
Fashion retailer Truworths reported a 7.3% drop in diluted headline earnings per share (HEPS) in the 52-week period ended July 1, as a tough economic environment in SA and the UK weighed on sales.
The century-old Truworths, whose brands include Identity and YDE in SA and Office in the UK, said merchandise sales fell 2.7% year on year to R18bn. Cash generated from operations was up 3.3% to R3.1bn. The numbers are slightly skewed as the previous year’s figures were for 53 weeks.
"Although sentiment improved after President Cyril Ramaphosa came into office, consumer spending remains under pressure due to low economic growth, high levels of unemployment and the continuously rising cost of living. A subsequent decline in consumer confidence and mounting pressure on emerging markets remain obstacles for growth," Truworths said in the statement.
Truworths, which has more than 700 retail outlets in SA and is heavily reliant on credit sales, has been lagging rivals TFG and Mr Price Group. It has been testing lay-buy options at some of its stores and will be rolling this out more widely as part of its strategy to grow cash sales, CEO Michael Mark said.
In the UK, political uncertainty "relating to the outcome of the Brexit negotiations continues to have a negative impact on the trading environment", it said. Retail sales for the group’s Office chain decreased 4.5% to £281m.
Truworths declared a final dividend of 159c a share, from 2017’s figure of 182c.