Share surprise despite poor results
St ay i n g wi t h di v i d e nd s , wea k Truworths results saw same store sales down 0.8%, with product inf lation at 6% – meaning a 6.8% decrease. But a reduction in the dividend cover from 1.6 times to 1.4 times means an improved dividend payout, albeit the actual dividend increase was only 9%. If the cover had not been decreased the dividend would have been down a few percentage points. By decreasing the cover management is telling the market that the company is producing more cash than it can readily use and that cash will be returned to shareholders – as it should be. That all said, the results did not look great and the surprise was the market pushing the share higher.