Fashion retailer Truworths, opens new tab on Thursday flagged trading risks including sustained pressure on the discretionary spending of South Africans, local port congestion and international shipping disruption after reporting a slowdown in profit growth.
Supply chain disruption due to attacks by the Iran-allied Houthi militia on ships in and around the Red Sea has had an impact on the delivery of imported merchandise for the first half of the South African winter season, it said.
Truworths also said it was hit by port congestion in South Africa. This resulted in “lower than expected merchandise deliveries of finished goods in the second quarter”, it said, “adversely affecting sales in the peak trading period”.
To weather these disruptions, the upmarket retailer said it is ramping up local production by using stock fabric through its design centres and local suppliers.
Truworth’s earlier said half-year profit growth slowed to 3.6% as South African shoppers held back on discretionary spending in the face of high inflation and interest rates.
LTD Kids owner Truworths, which posted 10.3% growth a year earlier, said its headline earnings per share for the 26 weeks to Dec. 31 rose to 512.6 cents. Its shares were down nearly 3% in afternoon trading on Thursday.
Group retail sales rose 8.2% to 12.2 billion rand ($635 million), mainly boosted by Truworth’s UK-based shoe chain Office and non-clothing areas such as cosmetics and mobiles.
Retail sales for Office in sterling terms rose by 15.6% and by 33.1% in rand terms to 3.8 billion rand.
Retail sales for Truworths Africa, its biggest business that sells mainly clothes and shoes, fell by 0.3% to 8.4 billion rand compared to the prior period.
“Retail sales (for Truworths Africa) were impacted by poor economic conditions and high interest rates leading to reduced disposable income and declining consumer confidence,” it said.
Credit extension fell as scorecards reacted to the deteriorating credit health of the South African consumer, weighing negatively on credit sales, the retailer added.
Source: SABC
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