Truworths sales volume tumble 55pc

Enacy Mapakame

Listed clothing retailer – Truworths’ unit sales for the first quarter to October 09, 2022 went down 55 percent compared to the same period last year as the trading environment remained challenging.

This year, the Government introduced a raft of measures aimed at stabilizing the economy, converging the foreign currency exchange rate on the official market and illegal parallel market as well as stopping arbitrage behavior on the stock market which also allegedly fueled inflation.

The measures also had an adverse impact on businesses with Truworths subsequently suspending credit sales.

“The increase of the bank policy rate to 200 percent with effect from July 1, 2022 resulted in the business suspending all ZWL credit sales with a consequent reduction in units sold.

ZWL Cash sales were negatively affected by the severe shortage of ZWL as a result of the tight monetary policy,” said chief executive officer Bhekithemba Ndebele in a trading update for the period.

During the quarter under review, all sales were cash-based, compared to the comparable quarter when cash sales accounted for 58 percent of total sales.

“Sales and profitability continue to be adversely affected by the restrictive pricing laws, which negatively affect competitiveness against the unregulated sectors.

“In addition to US dollar cash sales, the business is selling in US dollars on a lay-bye basis. US dollar credit is considered on a selective basis where there is assurance that the US dollar earnings are guaranteed and not an allowance,” said Ndebele.

Borrowings amounted to $56,35 million by end of the quarter at a cost of 205 percent per annum. According to Ndebele, there were no US dollar borrowings at the end of the quarter and there were no US dollar debtors.

Going forward, the clothing retailer contends the environment remains uncertain “in particular the sustainability of the bank policy rate of 200 percent and tight ZWL liquidity.”

Meanwhile, Truworths will publish financial results for the year to July 10 not later than January 15, 2023 after getting greenlight from the Zimbabwe Stock Exchange for extension of the deadline for publication.