Listed clothing retailer Truworths Limited merchandise sales for the four months ended November 4, 2017, experienced double digit growth across the board albeit the challenging economic environment that prevailed during the period under review. Volumes for chain stores Truworths and Topics were up 22 percent and 14 percent respectively against prior year comparative.
Number 1 stores, grew 21 percent and this was after store rationalisation. In January this year, the group closed six Number 1 stores that were unprofitable which helped reduce occupancy costs by 18 percent during the financial year 2017. Trading expenses for the three months to October 10, 2017, went down 6,3 percent.
Chief executive officer Themba Ndebele yesterday told the group’s shareholders that gross profit margins improved to 49,5 percent compared to 39,9 percent last year and was upbeat of improved earnings in the next quarter, which is the peak period.
“The business was profitable for the quarter compared to a loss in the similar period last year. We are now going into the strongest period. December is traditionally the strongest trading month of the year and we expect a reasonable trading December this year although it will be affected by product shortages on certain lines due to foreign currency shortages,” said Mr Ndebele.
Local industry has been facing foreign currency shortages due to low nostro balances affecting companies’ ability to import essential raw materials and meet their foreign obligations. Mr Ndebele indicated the foreign currency shortage could result in product shortages during winter 2018. The industry relies on imports as the country does no manufacture polyester material.
“Our business is 100 percent imports because Zimbabwe does not produce polyester. Even if we get it from a third party, it is still imported,” he said. In the year to July 2017, Truworths’ gross profit 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.–herald