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Truworths posted a record profit in the year to end-June, thanks in part to strong sales growth at its UK business and renewed credit appetite in South Africa.
Truworths saw its headline earnings per share climb by almost 50% to 779.8 cents – eclipsing the highest previous profit in 2016 (667.6 cents).
"There have been no material acquisitions by the group since 2016, so the results are reflective of organic rather than acquisitive growth, driven by an improved sales performance, strong gross profit margins and a continued focus on expense management," Truworths said in a statement.
A final cash dividend of 205 cents per share was declared, bringing the annual dividend to 505 cents per share – 44% higher than in 2021.
Sale of merchandise rose 9.1% to R17.9 billion.
Its UK fashion footwear retailer Office increased sales by almost 14% in rand terms, to R4.5 billion. In pounds, sales were up almost 17%,
For the first eight weeks of the new financial year, its UK sales rose by 11% in pound. But the company still expects to shrink its UK trading space by 4% in coming months, and warned that the country’s consumer spending will only come under more pressure amid growing inflationary pressures, compounded by rising interest rates and an anticipated slowing of the economy. In the past year, it closed six Office stores.
In the rest of its business, mainly Truworths in South Africa, its retail sales increased by 7.5% to R14 billion, with account and cash sales increasing by 8.7% and 4.9%, respectively.
Truworths women's wear sales rose by 6.4%, while Truworths menswear saw an increase of 6%. Sales at its other brands like Identity (+8%) were stronger, while YDE sales climbed almost 35% to R230 million. Truworths Africa opened 15 stores and closed 23 stores over the past year.
In the first eight weeks of the new financial year, retail sales rose by almost 13% compared to the same period in the previous year – which was hit hard by the civil unrest in KwaZulu-Natal.
While it warned that South African consumers are battling higher fuel and food prices, along with load shedding and a weak labour market, Truworths plans to grow by launching new brands, focusing on supply chain – and using credit and the strength of its book.
"The current health of the accounts portfolio highlights both the resilience of the customer base and the demand for Truworths’ quality, aspirational fashion."
Account sales comprised 69% of retail sales, from 68% in 2021. The number of active accounts increased by 2.3% to 2.6 million – with 82% of these accounts "in a healthy position", meaning that they are able to purchase. Overdue balances as a percentage of gross trade receivables improved to 14%, from 15% last year.
