Truworths International’s shares took a leap yesterday after it said that group retail sales increased during the first 26 weeks of its 2023 financial period, despite the record-level of load shedding in South Africa and the increasing pressure on consumers’s disposable income in both South Africa and the UK.
In late afternoon trade yesterday on the JSE, Truworths’ shares traded up 5.18% at R66.86 and have increased by 20.4% in the past six months.
In its business update for the 26 weeks ended January 1, 2023 released yesterday, the fashion retailer said group retail sales increased by 13.7% to R11.3 billion compared to the first 26 weeks (from June 28, 2021 to December 26, 2021 of the 2022 financial period.
According to the group, which owns the YDE and Identity brands, all of its South African stores were able to trade during load shedding, either manually or by way of backup power installed by the group or made available by landlords.
“At the end of the current period, approximately 77% of Truworths Africa’s turnover was covered by backup power. The group continuously assesses the backup power needs of its stores, and will install additional or extend existing backup power solutions where necessary.
“Notwithstanding these efforts, load shedding is likely to have had a negative impact on retail footfall and consequently on retail sales, especially in malls without backup power,” the retailer said.
In the prior period, retail sales’ performance was impacted negatively by the civil unrest in South Africa in July, 2021 mainly in KwaZulu-Natal and parts of Gauteng.
“The impact of which extended beyond August, 2021 while the group prepared to reopen the affected stores. Comparable store retail sales, which exclude sales from the stores affected by the civil unrest increased by 10.2% in the current period relative to the corresponding prior period,” Truworths said.
Despite this, the group said it expected its headline earnings to increase by 8% to 11% year on year to 485c-498c for the reporting period, this is a result of the reversal of some previously recognised impairment losses in respect of the office business segment’s store lease right-of-use assets, due to improved performance in these stores.
Truworths also flagged that online sales continued to show good growth in the current period increasing by 50% and contributing 3.0% to Truworths Africa’s retail sales.
Account sales comprised 70% of retail sales. Strong demand for merchandise purchases on account has resulted in Truworths Africa’s gross trade receivables increasing by 19.3% to R7.1bn, with the number of active accounts increasing by 5.7% to 2.8 million.
“These increases occurred notwithstanding the group continuing to apply its strict credit-granting criteria, and reflect the enticing nature of the group’s account and product offering,” it said.
Truworths International said it would publish its interim results around February 23.
BUSINESS REPORT