Shares in Truworths International, with its primary markets in the UK and South Africa, leapt nearly 8 percent after it released its results for the six months to December, which showed healthy South African margins and reduced debt in the UK.
Truworths sales lifted a slight 1.3 percent to R10.6 billion, despite being hampered by slow growth in Africa and a shadow cast over Europe due to Brexit uncertainty.
The company's headline earnings per share increased by 0.6 percent to 364c and the interim dividend remained unchanged at 249c.
Group chief executive Michael Mark said trading conditions in South Africa were hampered by power outages, high unemployment, modest increases in wages, higher average fuel and utility costs together with low consumer confidence.
Brexit uncertainty combined with continued pressure on store-based retailing continues to negatively impact the UK economy, he said.
Despite these headwinds, Truworths Africa, which comprises mainly the Truworths business in South Africa, increased retail sales by 2.7 percent to R7.8bn. Account sales increased by 4.3 percent and accounted for 71 percent of retail sales.
However, sales at UK’s Office declined by 3.3 percent to £151m (R2.94 billion), but Mark said the Office turnaround strategy initiated in September 2019 was progressing well and its debt restructures.
Truworths bought Office for £154m in 2015, but last year wrote down £97m of its value as the retailer continued to struggle in the tough UK market.
In September, the group informed its shareholders that it has successfully concluded an agreement with Standard Bank to provide a loan of £32.5m (around R600m) to refinance its struggling UK shoe retailer Office.
The Truworths Africa debtors book grew by R400 million to R6.8 billion at end December with the number of active accounts across Truworths, Identity and YDE increasing by 3.5 percent to 2.8 million customers.
“The doubtful debt allowance has increased from 18.8 percent to 20 percent with overdue balances as a percentage of the debtors book at a constant at 10percent. Net bad debts and collection costs remained unchanged, Truworths said.
The group closed a net 31 stores across all brands.
Truworths shares closed 3.56 percent higher at R45.64 on the JSE yesterday.