Wrap Text
Business update and voluntary trading statement for the 52-week period ended 30 June 2024
Truworths International Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1944/017491/06)
JSE and A2X code: TRU
NSX code: TRW
ISIN: ZAE000028296
LEI: 37890099AFD770037522
('Truworths International' or the 'Group')
BUSINESS UPDATE AND VOLUNTARY TRADING STATEMENT FOR THE 52-WEEK PERIOD
ENDED 30 JUNE 2024
Group retail sales for the 52-week period ended 30 June 2024 (the 'current period')
increased by 3.6% to R21.4 billion relative to the R20.6 billion reported for the 52-week
period ended 2 July 2023 (the 'prior period' or '2023').
Retail sales growth for the current period by business segment was as follows:
Change on prior comparable
Retail sales period (%)
H1* H2^ Full year~ Full
26 weeks 26 weeks 52 weeks H1 H2 year
Truworths Africa R8.4bn R6.1bn R14.5bn (0.3) (6.9) (3.2)
Office UK £162.0m £128.4m £290.4m 15.6 5.3 10.8
Group R12.2bn R9.2bn R21.4bn 8.2 (1.8) 3.6
* 26 weeks from 3 July 2023 to 31 December 2023
^ 26 weeks from 1 January 2024 to 30 June 2024
~ 52 weeks from 3 July 2023 to 30 June 2024
Account sales comprised 48% (2023: 51%) of Group retail sales for the current period, with
cash sales increasing by 10.0% and account sales decreasing by 2.5%, relative to the prior
period.
Truworths Africa
Retail sales in the Truworths Africa segment decreased by 3.2% relative to the prior period.
The current period sales performance competed against a relatively higher base in the prior
period, which recorded retail sales growth of 9.1% relative to the comparable 2022 52-week
period. A number of factors weighed on retail trading conditions in South Africa in the
current period, more notably in the second half:
- The challenging macro environment in South Africa, characterised by weak economic
growth, high interest rates, muted real wage growth, high utility and transport costs,
and high levels of unemployment, resulting in pressure on disposable income (and in
turn discretionary spend) as well as persistently low (albeit improving) consumer
confidence.
- Although the demand for Truworths' credit remained high and the number of active
accounts continued to grow, credit usage has been suppressed in the high-interest rate
and low consumer confidence and disposable income environment.
- Port congestion challenges in South Africa and global shipping disruption impacted
optimum inventory levels and merchandise mix from November 2023 and into the early
months of the winter 2024 season.
- The late onset of winter in South Africa, with unseasonably warm weather stretching into
late May of the current period, dampened the demand for winter merchandise,
consequently impacting retail sales, particularly in the last quarter of the current period.
Account sales decreased by 2.5% and comprised 70% of the segment's retail sales
(2023: 70%) for the current period. Cash sales decreased by 4.7%.
The Group maintained a strong focus on preserving gross profit margin and containing
costs, in an environment where Truworths Africa's like-for-like store retail sales decreased
by 6.1% (2023: 4.4% increase) and trading space increased by 0.9% (2023: 1.4%
increase), relative to the prior period. Product (retail selling price) inflation averaged 6.4%
for the current period (2023: 12.6% inflation).
Notwithstanding the challenging macro environment in the current period, management is
encouraged by early indicators that will support the positive trajectory of consumer
confidence in the year ahead. Monetary policy easing will contribute to improved credit
demand and affordability while prospects of higher growth and lower inflation are expected
to boost consumer disposable income and spending in the medium term.
Office UK
Retail sales in the Office UK segment increased by 10.8% (in Sterling) relative to the prior
period. In Rand terms, retail sales increased by 21.8% to R6.8 billion (2023: R5.6 billion).
Following a strong sales performance in the first half of the current period (up 15.6%),
second half sales growth was 5.3%. This compared to a high base in the prior period, which
recorded sales growth of 27.1% relative to the comparable 2022 26-week second half
period.
Consumer spending in the United Kingdom remains under pressure as a result of the decline
in real disposable income that consumers have experienced since late 2021, combined with
relatively high interest rates and modest economic growth. Despite the challenges in the
macro environment, the branded fashion footwear sold by Office UK proved to be
comparatively resilient.
Office UK continues to benefit from its unique market positioning, brand partnerships and
strong online presence. Online sales contributed approximately 46% of Office UK's retail
sales in the current period (2023: approximately 45%).
Office UK continued to invest in its new store development and remodelling programme
resulting in trading space growth of 11.4% relative to the prior period (2023: reduction of
12.6%). During the current period, a net of five stores was added to the portfolio with a
further three stores renovated, relocated and/or extended based on the latest store design.
Earnings
The Group estimates its earnings per share ('EPS') and headline earnings per share ('HEPS')
for the current period, on an undiluted basis, to be within the ranges reflected in the table
below:
52 weeks to 52 weeks to Estimated change
30 June 2024 2 July 2023 on prior period
(cents) (cents) (%)
EPS 1 022 – 1 057 888.5 15% to 19%
HEPS 795 – 830 873.3 -5% to -9%
The variance between the change in EPS and HEPS for the current period relative to the
prior period relates mainly to the reversal in the current period of previously recognised
Office trademark impairments. This impairment reversal is included in earnings but excluded
from headline earnings. Refer to the section on pro forma earnings information below.
Pro forma earnings information
The Group's relative earnings performance was impacted by a reversal of previously
recognised impairment losses in respect of the Office trademarks in the current period, the
indirect tax settlement in the prior period and other once-off impacts (collectively the 'pro
forma adjustments'). Excluding these pro forma adjustments, the Group estimates its EPS
and HEPS for the current period, on a pro forma undiluted basis, to be within the ranges
reflected in the table below:
Current period Prior period
Pro forma Pro forma Estimated
52 weeks to 52 weeks to increase on pro
30 June 2024 2 July 2023 forma prior period
(cents) (cents) (%)
EPS 805 – 838 813.1 -1% to 3%
HEPS 782 – 814 797.9 -2% to 2%
The relevant amounts were extracted from the Group's accounting records, and in the
opinion of the directors, fairly reflect the pro forma financial results. A complete
reconciliation of the reported results to the pro forma results will be provided in the Group's
audited annual financial results for the 52 weeks ended 30 June 2024.
The pro forma financial information has been prepared in accordance with the Group's
accounting policies, is provided for illustrative purposes only and, because of its nature, may
not fairly represent the financial performance of the Group.
Results announcement
As a result of external audit rotation and the consequential amount of information and
familiarisation that has had to be assimilated together with the new auditors (Deloitte), the
Group's audited financial results for the current period are scheduled for release on or about
Thursday, 12 September 2024.
Shareholders are advised that the financial information provided in this announcement is
the responsibility of the directors and that such information has neither been reviewed nor
reported on by the Group's external auditors.
30 August 2024
Cape Town
Sponsor in South Africa
One Capital
Sponsor in Namibia
Merchantec Capital
Date: 30-08-2024 01:30:00
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