Truworths profit exceeds estimate
Truworths, the retailer that has acquired two children’s clothing companies this year, posted annual profit that beat analysts’ estimates amid an improving second-half performance.
Its net income rose 2.6%, to R2.47 billion, in the 52 weeks through June 28, the Cape Town-based company said in a statement on Thursday, exceeding the R2.43 billion average estimate compiled earlier by Bloomberg. Retail sales increased 12% in the second half of the financial year compared with the first half’s 5.2% growth.
Truworths bought Earthchild Clothing in March and the South African clothing-retail business of Naartjie a month later as it sought growth opportunities.
Chief executive Michael Mark said: “The acquisitions of Earthchild and Naartjie were finalised in the second half, and both brands, together with LTD Kids, will be incorporated in the newly created specialist Truworths kids emporium. We plan to open 150 kidswear stores or outlets over the next five years,” he said.
“Management feels the credit environment is steadily improving despite the current tough economic environment.”
Retail sales, excluding Earthchild and Naartjie, rose 15% in the first seven weeks of fiscal year 2016, compared with a year earlier, the company said.
Truworths shares rose 7.1%, to R87.20 on Thursday in Johannesburg, the biggest gain in six months and reversing an earlier decline. Earnings excluding one-time items climbed 4%, to R5.92, while the company raised the dividend by 5.2%, to R4.05 a share.