Rextru profit margins fall

Rex Trueform, the small fashion retailer where empowerment doyen Marcel Golding and low key investor Hugh Roberts recently emerged as major shareholders – saw its profit margins shredded in the six months to the end of December.

Rex Trueform (Rextru) — the small fashion retailer in which empowerment doyen Marcel Golding and low key investor Hugh Roberts recently emerged as major shareholders – saw its profit margins shredded in the six months to end-December.

Interim results released on Friday showed that operating margins at Rextru’s fashion chain Queenspark were worn away to just 1.1% from more than 5% in the corresponding six months in 2015.

The margin is markedly lower than larger competitors such as The Foschini Group and Truworths International.

Queenspark’s operating profit was down by more than three quarters to just more than R3m, leaving Rextru’s at 23c per share compared with the 65c per share earned in the previous interim period.

The dividend was cut by more than half to 27c per share.

In commentary accompanying the results, CEO Catherine Radowsky said retail consumer confidence and spending continued to be adversely affected by a sluggish economy, an increase in living costs and regulatory changes to credit legislation. But Queenspark, which saw revenue decline 5%, did remain on the front foot during the interim period. She said that RexTru had acquired a franchised Queenspark retail store and opened another store in Namibia. Queenspark — which uses the Zando online shopping platform — had also recently started selling its products on the Spree website with “positive results”.

Rextru’s property segment, which is centred on the increasingly vibrant Salt River node in Cape Town, had contributed R4m to operating profits.

The company’s investment properties are valued at R72m, or close to 350c per share.

Looking ahead, Radowsky warned that Queenspark would remain under pressure during the second half. She said the second six months of the financial year were generally worse than the first six months.