Truworths is continually adapting — under an innovative CEO

Palesa Vuyolwethu Tshandu’s column, “Truworths offers a cautionary tale” (July 1), refers. She states that Truworths is not adapting to the changing retail environment characterised by international competition, younger consumers, reducing demand for credit and e-commerce disruption.

She also suggests that CEO Michael Mark is not the right person to lead the business in this environment, given his age and lengthy tenure.

As chairman of the Truworths board, I wish to state that Mr Mark has the full backing of the board, and it is fully supportive of the strategy being pursued by the executive team.

The board is satisfied that an appropriate succession plan is in place.

At the age of 65, Mr Mark remains youthful, energetic, healthy, flexible, innovative and adaptable, and with his wealth of experience remains the most suitable person to lead the group in this tough economic environment.

Unfortunately, Ms Tshandu’s column is short on facts regarding Truworths’ strategies. I therefore provide the following information to allow balance:

● Truworths’ share price is subject to the market forces, economic conditions and environmental backdrop all listed shares experience, but largely tracks the JSE general retailers index. It reflects similar volatility to that of listed competitors.

● The Iress consensus forecast for June 2018 reflected an overall hold recommendation in respect of the Truworths share.

● The entry of foreign competitors into the clothing retail market has had consequences for local retailers, but indications are that these are not material given the limited foreign store footprints.

● Truworths’ brands remain highly relevant to the market, as evidenced by recent results in the Sunday Times Generation Next survey.

● Truworths regards its account offering as an enabler of sales, and this offering remains central to its value proposition in South Africa, where store credit is well understood and utilised. Ms Tshandu’s claim that dependency on credit sales has hobbled Truworths is not borne out. Group sales are 50% cash, 50% credit. Truworths South Africa does sell 70% of its product on credit because of demand. But it only opens accounts for a third of those who apply.

● It is true that imported merchandise is characterised by long production lead times, but more than 50% of Truworths clothing is manufactured locally. In addition, a large proportion of suppliers deliver fast fashion “quick response” clothing.

● Truworths’ e-commerce offering was implemented this year and is based on world-class features.

● Truworths is well attuned to the apparel requirements of a younger population. Credit retail industry statistics at December 2017 reflect that Truworths equals or outscores the industry in terms of the number of active accounts it has across the 18-24, 25-29, 30-35 and 36-39 age groups.

In conclusion, the board firmly believes the group is continually adapting to a changed environment and market, while remaining true to its core values.

Hilton Saven, independent nonexecutive chairman, Truworths International