Chronicle EditorBusiness Reporter—
CLOTHING retailer Truworths Limited has reported that its merchandise sales for the first quarter of FY2017 declined significantly, compared to the 56 percent growth registered in the same quarter last year.In a trading update to shareholders, chief executive Mr Themba Ndebele said gross profit margins were also below last year due to increased promotional activities in a depressed economy.
The operating environment has been challenging for local industry, characterised by liquidity constraints, depressed local demand and low consumer spending.
“Merchandise sales for the first four months of the financial year were materially below last year,” advised Mr Ndebele.
Trading expenses were 15,25 percent below last year while debtors arrears were down 20 percent compared to financial year end July 2016. In the financial year to 2016, the clothing retailer said revenue dropped from $23 million to $19,6 million while total sales also fell 17,7 percent compared to prior year on challenging economic environment.
Its retail chains, Truworths, Topics and Number 1 Stores all reported declines in sales by 20 percent, 18 percent and 11 percent respectively, compared to the previous year.
The group earlier highlighted it would close six of its Number 1 Stores by end of this year on waning volumes and market share.
Management at Truworths is however upbeat of improved performance in the second quarter of the year, which incorporates the festive season.
Traditionally, the Christmas period is the peak season for retailers as well as businesses in the tourism and hospitality industry. This, Mr Ndebele said, would also determine the group’s half year performance.
“We are entering the traditional Christmas period which contributes significantly to sales and bottom line.
“The out-turn for the six months will be determined by the strength of the Christmas trading,” he said adding there was already a significant improvement in sales during the first two weeks of November.
“However, the sustainability of this improvement in sales will be tested from this week with pay days in most sectors of the economy,” said Mr Ndebele.
By close of trade yesterday, Truworths shares sold at 0,5 cents. On a year to date basis, the stock has declined 50 percent.
Online Reporter