Truworths delivers in tough times

The retailer has bucked the overall contraction in the retail sector, reporting a 16% increase in sales to R 5.7bn across its six clothing brands for the year to end-June.

Truworths had the benefit of an additional trading week for the financial year - for the 53-week period, operating profit was up 16% to R1.9bn, with the operating margin remaining steady at 33%.

Headline earnings per share rose 19% to 289.6c, placing the company on an earnings multiple of 10.4 times.

Merchandise sales at its flagship Truworths stores rose 11% to R3.4bn, with the company growing its market share in the ladieswear category from 20% to 21%, according to statistics released by the Retailers' Liaison Committee.

Truworths shares were trading 2.9% lower prior to the release of the numbers, but gained some ground once they were published on the Stock Exchange News Service; at 15:15, they were trading 0.8% down at 3 :040c.

The company declared a final dividend of 72c/share, taking the full-year dividend figure to 144c, a 20% rise on financial 2007's payout to shareholders.

In the commentary accompanying the numbers, Truworths' management said net bad debt as a percentage of the company's debtors' book had grown 11.3%. Its trade and other receivables grew 6% to R2.1bn.It said that interest income earned on the debtors' book "offset the increased net bad debts and associated costs".

Truworths' active account base grew by 6% to 1.8 million accounts, compared with the four-year compound growth average of 20%.

- Fin24.com

* The writer holds shares in Truworths.