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Business Reporter
Clothing retailer Truworths says sales volume for the six months to January 9, 2022 increased by 19,1 percent compared to the same period the previous year largely driven by cash sales.
Chief executive Bekithemba Ndebele said in a statement of financials for the half year period that the growth was despite depressed sales in the first quarter due to Covid-19 induced restricted trading hours in July and August.
“There was an increase in participation in credit sales due to increased credit granting as month on month inflation eased,” he said.
In terms of the sales split, credit sales accounted for 38,2 percent of total sales, increasing from 33,1 percent during the same period last year while cash sales were at 61,8 percent.
Mr Ndebele noted that the credit book grew by 141,5 percent in historical terms. He said that 88,5 percent of the customers were in good standing and able to purchase compared to 85,5 percent in the prior year.
“The doubtful debt allowance as a percent of gross debtors was 12 percent compared to 15,2 percent in the prior year,” he said.
The company’s revenue for the period amounted to $314 million compared to $221 million in the same prior year period.
Mr Ndebele noted that revenue performance for the period was adversely affected by the 20 percent retention on US dollar sales, which were liquidated at the heavily discounted auction rate compared to the parallel market rate.
Merchandise sales amounted to $277 million, retail sales $252 million and factory sales to third parties at $24 million.
Mr Ndebele said the group continues to implement and observe World Health Organisation approved Covid-19 guidelines throughout its operations to safeguard the health and welfare of staff, customers, suppliers and all stakeholders.
However, he noted, the negative effects of Covid-19 restrictions in 2021 were still being felt, but without any further Covid-19 restrictions, the business should continue to recover.
He said the global supply chain was still disrupted and this would continue to affect fabric availability and pricing.
Looking ahead, the company said that the regulatory environment and the deteriorating economic environment would continue to be a hindrance to normal trading.
Mr Ndebele said the 20 percent retention on US dollar sales liquidated at the official rate would negatively affect the company’s cash flows and profitability.
“The 20 percent retention is effectively a tax on gross revenue.
The “managed exchange rate” in which local retailers have to price their goods will have a negative impact on the cash flows and profitability,” he said.
He added that the resurgence of inflationary pressures necessitated that the business reduces its exposure on credit sales and focus on cash sales.
Online Reporter