Truworths sales growing

Cape Town – Fashion retail group Truworths International [JSE:TRU] reported a stronger second half performance for the period to June 2015 as credit conditions showed early signs of improvement.

Retail sales increased by 8% to R11.6bn, with sales growing by 12% in the second half compared to 5% in the first half.
 
Diluted headline earnings per share grew 4% to R5.92 after growing by 0.8% in the first half and by 8.4% in the second half. The annual dividend was increased by 5% to R4.05 per share, with the dividend cover ratio being maintained at 1.5 times.
 
CEO Michael Mark said, while the group’s mass middle income customer base remains under financial pressure, “we are experiencing a steady improvement in the credit environment after one of the longest credit contractions for many years".
 
Mark said the group had expanded its kidswear brand offering with the acquisitions of Earthchild and Naartjie.

“The acquisitions were finalised in the second half and both brands, together with LTD Kids, will be incorporated in the newly created specialist Truworths kids emporium. We plan to open 150 kidswear stores or outlets over the next five years,” he said.
 
Trading space grew by 7.7% as the store network was increased to 747 following the opening of a net 44 new stores and the addition of 62 stores from the Earthchild and Naartjie acquisitions.

The store footprint in the rest of Africa was increased to 44, with four outlets opened in Namibia and two each in Ghana and Zambia while two stores were closed in Nigeria. Retail sales outside South Africa increased by 13% and now comprise 3.8% of the group’s retail sales.

On the outlook for the 2016 financial year, Mark said: “We feel that the credit environment is steadily improving despite the current tough economic climate.”
 
Capital expenditure of R767 million is planned, with the majority to be invested in buildings and distribution facilities, as well as store development and renovation.