South African fashion retailer Truworths International reported yesterday that retail sales for the first 17 weeks of the 2023 financial period rose by a robust 15.5% to R5.9 billion.
But while Truworths said it was pleased with the positive performance achieved in the current period, the trading environment was expected to remain challenging in the year ahead.
This was due to low economic growth and ongoing electricity load shedding expected in South Africa and as consumers contend with escalating fuel, electricity and food prices as well interest rates.
Account sales comprised 52%, an increase from 49% from the prior comparable period of retail sales, with account and cash sales increasing by 21.5% and 9.7%, respectively, relative to the prior period.
Retail sales for the Truworths Africa segment, which excludes the UK-based Office segment and comprising mainly of the Truworths businesses in South Africa, rose by 16.9% to R4.4bn.
It said in the prior period, retail sales performance was impacted negatively by the civil unrest in South Africa in July 2021, the impact of which extended beyond August 2021 while the group prepared to reopen the affected stores.
Online sales continued to show good growth in the current period increasing by 33% and contributing 3.3% to Truworths Africa’s total retail sales.
Account sales comprised 70% of retail sales from 68% the prior corresponding period. Trading space increased 0.7% relative to the prior period and was expected to increase by 2% for the 2023 financial period. Merchandise inflation averaged 12.0% for the current period.
At the end of the first quarter period ended October 2, 2022, Truworths Africa’s gross trade receivables were 13.3% higher at R5.8bn relative to R5.1bn at the prior quarter period ended September 26, 2021. The number of active accounts increased by 3.6%.
Meanwhile, retail sales for the UK Office segment increased in by 11.6% to £76.8 million (R1.6bn) relative to the prior period’s £68.8m.
E-commerce sales for the current period comprised 41% of total retail sales, declining from a contribution of 45% in the prior period as high-street trading normalised.
Office’s trading space decreased by 3.4% compared to the prior period and is expected to decrease by 8% for the 2023 financial period as the business continued to exit marginal and loss-making stores as leases expire or lease breaks become available.
Looking ahead, the group said it would continue its focus on the strategic initiatives outlined in its 2022 annual results announcement.
In Truworths Africa, these initiatives included growing the group’s market share in key categories, using the strength of the book to grow sales through consistent application of Truworths’ account risk management strategies, launching new and expanded retail store concepts and brands, enhancing the supply chain and speed to market, as well as improving the omni-channel experience.
Office would continue to build on the strength of its brand relationships, work towards increasing the sales contribution of its made-to-order (own-brand) range, progress the replacement of key legacy systems, and invest in the store portfolio through the planned opening of two new stores and the modernising of four strategically important stores, Truworths said.
“Shareholders are advised that this business update does not constitute an earnings forecast,” it noted.
Truworths interim results were scheduled to be released on February 23 2023.
In September the retailer announced that it was beefing up its management team to spur its growth trajectory.
It had appointed Sarah Proudfoot and Emanuel (Mannie) Cristaudo as the group’s joint deputy CEOs with effect from October 1.
In September Truworths reported a 49.9% rise in annual profit as consumers coming out of Covid-19 lockdowns splashed out on items to rejuvenate their wardrobes and homes.
BUSINESS REPORT