True worth is elusive in a changing market
Amid rising competition and a declining stock, Truworths is accused of being out of touch
IN the early 1980s, two of South Africa's retail giants, Woolworths and Truworths, joined forces to form the Wooltru Group. Since the two retailers unbundled in the early 2000s, they have gone from strength to strength, building their local operations. In the case of Woolworths, and recently Truworths International, the groups have expanded offshore. Truworths' focus on local operations five years ago earned it the accolade of being the premier fashion retailer on the JSE. But as Truworths International celebrates 100 years in retail, the stock has declined, losing over 17% in the past year. Analysts now ask whether it will be the next cautionary tale in the retail sphere. Victor Dima, a director at Arqaam Capital, rates the stock as an underperformer. "It's hard to talk about sustainable improvement in Truworths operations. "One of the biggest challenges for Truworths is the fact that they bank on credit," he said. "If you look at the South African part of the business, 70% of sale...
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