Truworths runs into stock supply issues as global supply chain woes bite
TRUWORTHS, the JSE-listed fashion and beauty retailer, ran low on stock in some ranges due to global supply chain bottlenecks during the first quarter of its 2022 financial year which runs between June and September, it said yesterday. Truworths, whose brands include Naartjie, Truworths and Daniel Hechter, said the supply chain bottlenecks had added to Covid-19related challenges and load shedding in its main footprint.
“Trading conditions in the group’s main markets, South Africa and the UK, continue to be impacted by the Covid-19 pandemic which, together with international supply chain disruptions, have resulted in stock shortages in certain product ranges,” said the group.
The global markets are reeling from the impact of supply chain disruptions which resulted in logjams at ports, chip shortages and sky-high shipping costs during the period under review.
The group said, however, inventory levels had improved recently and were in an improved stock position for the upcoming peak trading season.
“The group will continue to utilise its extensive experience to manage the risk of fashion through its proven merchandise design and buying processes, to manage its inventory optimally and to manage the risk of the book through the consistent application of its account risk management strategies to grow and ensure the ongoing health of the portfolio,” it said.
The mayhem in KwaZulu-Natal and parts of Gauteng had a negative impact on sales performance from mid-July to the end of August after impacting 57 stores. Yet 51 of the 57 affected stores had reopened by the end of August, another store was set to reopen in December, while the remaining six stores
remained closed as they were located in fire-damaged shopping centres.
Truworths said the stronger rand served to counter good retail sales
growth achieved in the UK, resulting in group retail sales for the quarter falling by 1.2 percent to R3.9 billion, compared to the first quarter of 2021.
Account sales remained unchanged at 49 percent of group retail sales, with account sales in Truworths Africa comprising 68 percent of retail sales.
Retail sales at Truworths Africa increased by a marginal 0.2 percent compared to the same period last year. The group said comparable store retail sales which, among others, adjust for the impact of stores damaged and unable to trade as a result of the civil unrest, increased by 2.1 percent.
While low stock levels in the current period were negative for sales, markdowns were lower relative to the prior period, thereby supporting the gross profit margin. Truworths Africa’s online sales increased by a staggering 45 percent and contributed 3 percent to the segment’s total retail sales.
At the group’s UK-based office, segment retail sales increased by 3.1 percent in sterling terms to £52.7 million (R1.1bn) relative to the prior period’s £51.1m.