Truworths flags unrest damage
Truworths International says the civil unrest directly affected 57 of its 758 stores that account for about 7% of the sales in its local store portfolio. It said in an update on Tuesday for the 52 weeks to June 27 that 160 more stores were affected indirectly due to precautionary closures.
Truworths International says the civil unrest directly affected 57 of its 758 stores that account for about 7% of the sales in its local store portfolio.
The owner of brands such as Young Designers Emporium (YDE) and Identity said in an update issued on Tuesday for the 52 weeks to June 27 that 160 more stores were affected indirectly due to precautionary closures.
While the group’s distribution centres, which are in the Western Cape, were not affected, its third-party logistics provider that delivers merchandise to its SA stores and e-commerce customers, is experiencing major disruption due to infrastructure damage and risks related to road transport in KwaZulu-Natal.
“This means that the group’s stores that are still trading are also being adversely affected, as they are not receiving deliveries of merchandise allocated to them,” Truworths said. It also said the disruption is likely to be resolved by next week.
Truworths said several KwaZulu-Natal manufacturers that supplied its stores have suffered from looting and vandalism, with some rendered inoperable until further notice. Even factories not hit directly by the unrest were affected as staff are afraid of returning to work.
INSURANCE COVER
“The bulk of the Truworths Africa segment’s locally produced merchandise is supplied by manufacturers based in the Western Cape, while imported merchandise generally arrives via the Cape Town harbour,” the group said.
“These factors have significantly limited the direct impact of the incidents on merchandise sourcing and procurement.” Truworths said that it believes it has adequate insurance cover to mitigate much of the merchandise losses, store damage and profit drop it has suffered due to the unrest.
In the trading update Truworths
said sales in its most recent financial year increased 0.5% as the Covid-19 pandemic affected operations, particularly in SA and the UK.
The Cape Town-based retailer said sales rose to R17bn in the 52-week financial period ended June 27, up marginally from the R16.9bn reported for the prior 52-week reporting period.
Truworths Africa’s sales, which mainly comprises its SA operations, rose 5.5% to R13bn, up from R12.3bn in the previous 52-week period.
MATERIALLY AFFECTED
“While the uncertainty around Covid-19 is expected to continue for many months, especially in light of new variants of the virus and uncertainty around vaccine efficacy, the group’s strong balance sheet and ability to manage margins and costs effectively, positions it to succeed in these challenging times,”
Truworths said. The group also said that it continues to be “materially affected” by the pandemic that has adversely affected economic growth, employment, consumer confidence and spending in SA.
Trading conditions in the UK were also “exceptionally challenging” in the 52 weeks due to the country’s exit from the EU and government efforts to contain the spread of Covid-19.
While Truworths’ UK sales were supported by online retail and the relaxation of Covid-19 restrictions as vaccination gained momentum, sales at its office segment declined, falling 12.9% in rand terms to about R4bn in the period.
The group is due to publish its audited financial results for the 52 weeks ended June 27 on or about September 2.
Truworths’s share price was up 1.8% at R58.75 on Tuesday.