Truworths International: Strong Growth Amidst Market Challenges

  • Truworths International reports strong retail sales growth of 11.4% to R20.6 billion for the 52-week period ended 2 July 2023, despite facing challenges in South Africa and the United Kingdom.
  • Truworths Africa segment achieved a 7.3% increase in retail sales, while the Office segment saw a remarkable 16.9% growth in the current period.
  • The Group's resilience was evident through effective cost management, new store formats, and investment in backup power solutions to mitigate the impact of the energy crisis in South Africa.

Truworths International Limited has announced impressive retail sales growth for the 52-week period ended 2 July 2023. Despite facing challenges in its key markets, the company reported a remarkable 11.4% increase in retail sales, amounting to R20.6 billion, compared to R18.5 billion reported in the 53-week prior period ended 3 July 2022. However, due to the inclusion of a 53rd week in the prior period, direct year-on-year comparisons are not comparable.

Steady Growth in a Challenging Economic Climate

Truworths International achieved this growth despite the challenging macroeconomic environment in South Africa and the United Kingdom. The group’s ability to maintain steady growth is attributed to its adherence to a sound Business Philosophy, effective cost management strategies, and consistent inventory and trade receivables management. Moreover, the rollout of new store formats bolstered the company’s performance, demonstrating resilience in the face of economic headwinds.

Compared to the corresponding 52 weeks of the 2022 financial period, the Group’s retail sales for the current period saw an impressive increase of 13.2%.

Retail Sales Performance by Business Segment

The Group’s retail sales growth was driven by its two key business segments: Truworths Africa and Office.

Truworths Africa Segment:

  • Retail sales for the Truworths Africa segment, primarily comprising Truworths businesses in South Africa, reached R15.0 billion for the current period, representing a 7.3% increase from the prior period. Compared to the corresponding prior period, the segment’s retail sales increased by 9.1%.
  • The segment’s performance was notable, given the challenging economic conditions in South Africa. Despite pressure on consumer disposable income and discretionary spending, Truworths Africa managed to achieve a 4.4% increase in like-for-like store retail sales.
  • The segment’s account and cash sales also demonstrated positive growth, increasing by 8.2% and 5.2%, respectively.

Office Segment:

  • The Office segment, primarily consisting of Office businesses in the United Kingdom, reported retail sales of £262.1 million (approximately R5.6 billion) for the current period. This represents a significant 16.9% increase from the prior period and a remarkable 25.9% increase compared to the corresponding prior period.
  • The improvement in trading conditions in the UK, with tourism rebounding and employees returning to offices after the lifting of COVID-19 restrictions, contributed to the segment’s strong performance.
  • Office’s strong online presence remained an asset, with online sales accounting for approximately 45% of its retail sales.

Impact of the Energy Crisis

Truworths International also faced challenges from the energy crisis in South Africa, with electricity load shedding significantly affecting economic growth and job creation. The Group invested approximately R40 million in backup power solutions for its stores in South Africa to mitigate the impact of load shedding. At the end of the current period, 87% of the segment’s South African sales stores were equipped with alternative power sources.

Financial Results and Future Outlook

Truworths International is currently finalizing its financial results for the current period, subject to external audit. The Group is scheduled to release its audited results on or about Thursday, 31 August 2023.

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