Truworths warns on full-year drop

Fashion retailer Truworths says it expects full-year profit to fall by 1% to 3%.

Fashion retailer Truworths says it expects full-year profit to fall by 1% to 3%.

Although the outlook for retail sales remains favourable, consumer spending is expected to be somewhat contained as household incomes remain under pressure due to high levels of consumer indebtedness, the poor job market, higher taxes, and increasing food and fuel prices.

Truworths said on Friday diluted headline earnings per share for the 52-week period ended July 1 were expected to be between 601c and 615c per share, compared with 621c from the comparable 52-week period the year before. The retailer’s results will be released on or about August 16.

Group retail sales decreased by 2.7% from R18.5bn to R18.0bn. The company, headed by long-serving CEO Michael Mark, owns brands like Identity, YDE and Uzzi.

At its flagship Truworths chain, sales increased by 0.8% relative to the comparable prior period, with cash sales increasing by 2.6%.

Relative to the 53-week prior period, Truworths’ retail sales decreased by 2.1% to R13.1bn, with cash sales remaining unchanged and account sales decreasing by 3%.

Competition in the apparel space is rife as foreign entrants like H&M, Zara and Cotton On continue to steal market share.

The company, which is heavily reliant on credit sales, said account sales comprised 69% from 70% in 2017.

Comparable product deflation averaged 1.4%.

Truworths has just over 728 stores in SA and 49 in the rest of Africa. Retail sales for the group’s UK-based Office segment decreased by 2.5% compared with the comparable prior period. Relative to the 53-week prior period, Office’s retail sales decreased by 4.5% to £281m.

The group’s gross trade receivables fell 3.3% to R5.6bn, compared with R5.8bn at the prior period-end, mainly as a result of the fall in credit sales.