Truworths International’s retail sales increased 10.9% to R6.6 billion in the first 17 weeks to October 29 of its 2024 financial year after strong growth in the UK office and only a 1% increase in retail sales in Africa.
Truworths Africa’s retail sales - comprising mainly of the Truworths fashion businesses in South Africa - increased by 1% to R4.4bn relative to the prior period.
In the UK, in rand terms, retail sales for Office increased by 38.8% to R2.1bn, with the contribution from E-commerce sales increasing to 45% of total retail sales from 41% in the prior period.
“While the group is pleased with the positive sales momentum in Office, South African consumers are expected to remain under pressure as electricity, fuel, food, borrowing and general cost of living increases continue to weigh on disposable income,” the group’s directors said in an update yesterday.
In Africa comparable store retail sales fell by 2.2%. Trading space increased 1.1% and was expected to range between 1% and 2% for the 2024 financial period.
Retail selling price inflation averaged 9% in Africa (Oct 22: 12% inflation). Online sales showed good growth, increasing by 41% and contributing 4.7% to Truworths Africa's total retail sales.
Office's trading space decreased by 5.5% compared to the prior period due to the segment exiting all seven of its stores in Germany, but the space was expected to increase by about 9% for the 2024 financial period, as new stores were opened and existing stores were renovated.
At the end of the first quarter to October 1, 2023, Truworths Africa's gross trade receivables were 7.9% higher at R6.2bn relative to R5.8bn at the prior comparable quarter end on October 2, 2022.
The number of active accounts increased by 5.1%. The group continued to apply its conservative credit-granting criteria.
Truworths’ directors said they remained cautiously optimistic about the medium-term outlook for the South African economy.
“Household spending will benefit as inflation moderates, with the potential for interest rate relief, while a sustained reduction in load shedding and a stable post-election environment could stimulate consumer confidence and economic activity,” they said.
Growth initiatives included launching new retail concepts, expanding its integrated in-house design capability and improving speed to market, and investing in technology, including the omni-channel experience.
In the constrained spending environment, Truworths aimed to grow by capitalising on the strength of its account portfolio, its expanding customer base and the appeal of its quality, aspirational fashion, supported by the strong balance sheet and robust cash flows.
Office's growth would be driven by introducing and growing new brands, new store openings, and the remodelling and the extension of existing stores in strategically important locations.
This would be supported by the strength of its relationships with leading footwear brands as well as planned investment in technology and customer relationship management capabilities, the directors said.
Truworths’ share price traded 0.32% weaker to R78.03 yesterday afternoon. The price was slightly up from R77.80 a year before.