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Truworths: More than 70% of sales in SA now on account

Truworths [JSE: TRU] says its retail sales for the past 18 trading weeks (up to 3 November) increased by 2% to R6.3 billion, compared to the same period last year.

In a trading update the clothing retailer said that while cash sales fell by 1% over the same time period, sales on accounts – which now represent 52% of total sales – rose by 5%. Excluding its UK stores, account sales at Truworths Africa (which mainly consist of the Truworths businesses in South Africa) now represent 71% of sales. Apart from Truworths, the group includes YDE, Uzzi, Earthaddict, Earthchild and Naartjie.

Overdue balances on these accounts (as a percentage of gross trade receivables) reached 13%, while 85% of active account holders are permitted to purchase clothes. Prices at its stores were 0.4% higher than a year ago, the group said.

Retail sales in pounds at its UK shoe retailer Office were unchanged at £95 million. Office’s trading floor space shrank by 7% compared to the previous year, as it continues to close unprofitable stores.

Truworths bought Office for £154m in 2015, but the young fashion footwear chain has struggled amid Brexit uncertainty. Earlier this year, Truworths was forced write down £97m of Office’s value as it continued to wrestle with a large debt burden. In September, Standard Bank agreed to provide a pound-denominated loan of £32.5 million (around R600m) to refinance Office.

So far this year, Truworths’ share price lost a third of its value amid the Office woes. But it perked up by almost 6% on Thursday morning following the trading update. Interim results will be announced in February.

Compiled by Helena Wasserman

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