Truworths posts 19% rise in profit

FASHION retailer Truworths on Wednesday reported a 19% rise in first-half profit but said it expected the credit environment to deteriorate owing to rising levels of consumer indebtedness.

“This is likely to affect both the group’s delinquency and active account growth, as we will continue to apply strict credit granting and risk policies,” CEO Michael Mark said.

Diluted headline earnings per share were at 324.8c for the 26 weeks to December 30. Operating profit for the six months rose 13% to R1.9bn, while retail sales rose 14.8% to R5.5bn. Its cash balance rose to R2.6bn at period end.

The Truworths ladies-wear brand, which accounted for 34% of retail sales, increased turnover by 13% to R1.9bn, Truworths menswear by 16% to R1.0bn, Daniel Hechter by 15% to R681m, LTD by 21% to R260m, and Identity by 18% to R876m.

Daniel Isaacs, a 36ONE Asset Management analyst, said although Truworths’ results looked good, “especially bottom-line growth”, its outlook statement dampened sentiment, “indicating a possibility of a weaker second half”.

Truworths said retail sales for the first seven weeks of this year had increased by 9.3%.

For the 26-week period, its debtors book grew by 15.8% to R4.5bn and the active customer account base rose 7% to more than 2.6-million accounts.

Net bad debt as a percentage of the debtors book rose from 8% to 9.3%, Cape Town-based Truworths said.


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