JOHANNESBURG - Truworths is embarking on a succession process in preparation for chief executive Michael Mark’s retirement after almost 30 years at the helm.
The clothing retailer said it would seek a suitable candidate to take over from Mark, who successfully led the business to world-class levels of performance after being an employee since 1988 and serving as chief executive since 1991.
“The company will now be entering a phase of a planned succession process approved and motivated by the nomination committee and then hand over to a highly accomplished team, after which (Mark) will retire as chief executive,” said the group.
It added that the phased approach would ensure that the business was appropriately structured to emerge from the Covid-19 pandemic era successfully and to launch its growth phase. It said it wanted to take advantage of the exciting long-term opportunities.
Truworths, whose brands include the UK footwear brand Office, Ginger Mary, Uzzi and Daniel Hechter, said further detail on the agreed timelines and performance goals relating to the succession process would be published in its integrated report.
Mark was meant to retire in 2015, and Truworths had appointed prominent French fashion executive Jean-Christophe Garbino as his successor.
However, Garbino resigned less than a year into his role. Independent analyst Syd Vianello said Mark’s legacy was the business he had built up.
“It’s the most profitable retail business in the country in terms of both gross margins and net margin,” Vianello said.
“It’s a business which has grown nearly entirely by internal growth or internally developed brands, a business which produced the most astonishing cash flows in the industry.”
Truworths entered the UK market through the acquisition of Office in 2015 for £256million as a springboard into the northern hemisphere.
However, profitability at Office has tumbled due to uncertainty over Brexit and muted consumer confidence. Pressure on store-based retailing as consumer spending shifts to online shopping has also negatively impacted the UK economy, and the retail sector in particular.
This week, the group said the year ended in June was severely impacted by the Covid19 pandemic which resulted in lower revenue, higher debtors provisioning levels and impairments. It reported a 28.2percent decline in headline earnings per share to 410.4 cents during the year ended June.
The group incurred a trading loss of R1.3billion from a R459m profit in 2019.
Truworths said the continuing tough trading environment in the UK, fuelled by the Covid-19 pandemic in the second half of the current period, had impacted the profitability of the Office segment, resulting in a non-cash impairment charge of £118m (R2.5bn).
Group retail sales for the current period decreased by 9.2percent to R16.9bn from R18.6bn in 2019. Vianello said Mark had kept his team together throughout these years and was a decisive leader.
The independent analyst cited “the decision to exit Australia, take the loss on the chin and move on, and decisions to exit parts of Africa where it did not work out ... plus his obsession with cost control”.
He said Mark’s successor would need to sort out Office and develop an online presence.
“Whoever takes over will inherit a unique business, with strong cash flows even post-Covid, and a very clean balance sheet,” Vianello said.
BUSINESS REPORT