Retail

Major South African retailer under pressure

Truworths’ latest sales data revealed lacklustre growth and a decline in its Africa segment, which has seen the retailer’s share price decline by nearly 4%.

Truworths provided a business update on Friday, 31 January, for the first 26 weeks of its 2025 financial year, covering the period from 1 July to 29 December 2024.

Truworths owns well-known brands like Daniel Hechter, Uzzi, Ginger Mary, Naartjie, and LTD Kids.

The company’s overall retail sales grew by 2.4% to R12.5 billion, largely due to a strong performance in its Office UK segment.

However, its Truworths Africa segment, which includes South Africa, saw its sales decline by 1.1% to R8.3 billion.

This segment’s account sales, which comprise 70% of the segment’s retail sales, decreased by 0.9%. The number of active accounts decreased by 0.7%.

Gross trade receivables related to the active account portfolio decreased by 1.6% to R7.1 billion.

However, online sales in this segment showed good growth, increasing by 38% and contributing 5.8% to Truworths Africa’s retail sales.

This segment’s decline was offset by strong growth in the retailer’s Office UK segment, which grew sales by 11.3% to £180 million.

In rand terms, retail sales for Office UK increased by 9.9% to R4.2 billion.

Truworths said this was driven by the segment’s successful store modernisation and expansion programme, a top-tier eCommerce platform, and strong, well-established brand partnerships.

Online sales in this segment increased by 7.0% and comprised nearly half – 45.2% – of total retail sales.

However, this segment’s strong performance was not enough to grow Truworths’ overall earnings, which are expected to decline.

Truworths’ earnings per share (EPS) are expected to decline by between 7% and 11%, while headline earnings per share are projected to drop by between 4% and 8%.

The retailer explained that this is mainly due to the decrease in sales and expected gross profit margin decline in Truworths Africa.

Truworths’ interim results are expected to be released on or about Thursday, 27 February 2025.

Investors were likely disappointed in the retailer’s lacklustre results, as Truworths’ share price was down around 3.30% on Friday, 31 January, at the time of publication.

In the year to date, Truworths’ share price is down nearly 16%.

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