Truworths loss widens to $1,7m

Enacy Mapakame Business Reporter
LISTED clothing retailer, Truworths loss after tax widened 70 percent to $1, 7 million in the year to July 9, 2017 from $1 million in the prior year comparative. Management attributed the depressed profitability in the last year to poor sales, which reflected through a 24 percent decline in revenue. Revenue amounted to $14,8 million from $19,6 million in the prior period, as sales declined by 29 percent to $12,2 million as volumes, dollar values and sales are still below 2015 levels.

Sales for the group’s chain stores, Truworths and Topics, were down 7,1 percent and 6,3 percent respectively in the second half. Number 1 stores was the only unit to record a growth in sales at 16, 5 percent. Truworths chief executive officer Themba Ndebele told analysts that the first half of the financial year under review was challenging on poor consumer sentiment.

“First half to December 2016 was very depressed with poor consumer sentiment as volumes and dollar sales went down. But from March onwards there was improved sentiment and an increase up to June 2017,” he said.

Gross profit for the group decreased by 40, 2 percent as product was discounted to stimulate sales in the first half of the financial year. In line with the challenging economic conditions, net bad debt was higher than the prior year with write offs increasing by 121 percent and recoveries reducing by 62 percent. The allowance for doubtful debts increased by 22 percent. Cash generated from operations increased to $1, 4 million from $24,221 previously.

Mr Ndebele said total trading expenses for the group had been going down in the last four reporting periods. The group closed six Number 1 stores in January this year that were unprofitable and this helped reduce occupancy costs by 18 percent.

“Base rentals were 21 percent lower than prior year due to rent reductions and the closure of six Number 1 stores,” he said.

Total assets decreased from $18, 2 million to $15, 8 million. The board did not declare a dividend “due to the difficulties in the operating environment.”