Truworths gets rid of its troubled Sportsgirl

Published Dec 14, 1999


Cape Town - Truworths International, the fashion retailer, said yesterday that Sportsgirl, its troubled Australian venture, had been sold for an undisclosed amount.

The buyer was Sussan Corporation, the Australian group that apparently made a bid against Truworths for Sportsgirl in 1994.

Retail watchers welcomed the move, which they said was positive because it removed the uncertainty hovering over Truworths since July.

One said: "Truworths management has cut its losses and sold, freeing the group to focus on its business at home."

In July Truworths warned that a loss of A$12,9 million (R49 million) at Sportsgirl would badly affect the core South African operation.

Headline earnings a share fell 17,3 percent to 28,2c for the full year to June.

Ferrier Hodgson, the voluntary administrators, said the sale included only the Sportsgirl chain. The remaining brands - manufacturing arm Aywon and retail divisions Sportscraft and David Lawrence - were still up for grabs.

Interest in those divisions was high, with signs that those sales could also be wrapped up soon, possibly by the end of December.

Truworths has announced a claim of A$73 million with Ferrier Hodgson.

Analysts believed it was unlikely that Truworths would look for another offshore venture in the short term, and instead would consolidate at home with the launch of a number of fresh concepts. "When it does look offshore again it will almost certainly do so much more cautiously," one said.

South African retailers, with the exception of New Clicks Holdings (NuClicks) and Metcash, had experienced difficulties in exporting their management capital and retail formula to a market different from their own. "NuClicks already had a clone of its business in Australia while Metcash had the necessary management capital," the analyst said.

Sportsgirl, which retails clothes and accessories in the mid to high market range through 180 stores in Australia, was hampered by tough market conditions, which resulted in a 5 percent drop in sales from 1998 to 1999, Ferrier Hodgson said.

Truworths shares ended the day 2c up at R6,97 on the JSE.

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