Truworths encountered tough economic conditions in the local and UK markets in the 53-week financial year to end July 2. Despite these challenges, the group’s financial position remained strong, with the net asset value per share up 8% to 2201 cents.
Chief executive Michael Mark, reflecting on the results, said the domestic performance was impacted by pressure on consumer spending in the current recessionary environment, while the affordability assessment regulations continued to restrict new account growth and limit account sales in Truworths. “Uncertainty in the UK in the aftermath of the Brexit vote contributed to volatile trading conditions for Office over the past year,” he said.
Mark said the retail trading environment locally was also impacted by aggressive and unsustainable pricing, which has created stress in the market and led to increased mark-down and promotional activity, closure of retailers and down-scaling of others.
In the results, group retail sales increased by 9% to R18.5 billion, with Truworths contributing sales of R13.4bn and Office R5.1bn. Headline earnings per share (Heps) and diluted Heps declined marginally by 0.8% to 662c and 660.9c a share, respectively.
The group declared a final cash dividend of 182c a share.
Progress had been made with the ongoing integration of Office into the group since its acquisition in December 2015, with the footwear chain reporting lower stock levels and an improved inventory turn following the alignment with Truworths’ retail processes and systems.
Online sales in Office continued to gain momentum and increased by 25%, accounting for 28% of the chain’s total retail sales.
Truworths International owns the Truworths clothing chain in South Africa and the Office footwear chain in the UK.
Truworths said it would launch its new e-commerce site in the first half of the 2018 financial year. “Through the online store customers will ultimately have access to the full range of Truworths, Identity, kidswear and Office London merchandise,” it said.
The group’s retail footprint increased to 937 stores after opening 8 new stores during the year. This comprises of 734 outlets in South Africa, 141 in the UK (including 38 concession stores), 47 in the rest of Africa, eight in Germany and seven in the Republic of Ireland.
The group said overall trading space grew by 1.5%.
Trading space is expected to grow by 5% in 2018 with Truworths growing by 5% and Office by 2%, buoyed by the launch of the Office London footwear chain in South Africa, with the first 10 stores being opened this month.
Truworths shares gained 4.53% to close at R79.86 on the JSE yesterday.