Well-known South African retailer feels the pain

Truworths’ African operations continue to struggle, placing pressure on the retailer’s earnings and profitability.

Truworths owns well-known brands like Daniel Hechter, Uzzi, Ginger Mary, Naartjie, and LTD Kids and operates across several regions, including Africa and the UK.

The retailer released its interim results for the 26 weeks ended 29 December 2024 on Thursday, 27 February 2025.

These results revealed another lacklustre performance from one of South Africa’s biggest clothing retailers.

Revenue grew by a meagre 1.4% to R12.93 billion compared to R12.75 billion the year before.

In addition, group retail sales increased by 2.4%, but its cost of sales increased by 6.56%.

This saw the company’s basic earnings per share fall by over 8% to 488.6 cents, while headline earnings per share decreased by 4.6% to 489.2 cents.

The retailer’s profit for the period dropped by 7.3% to R1.83 billion, compared to R1.97 billion in the comparable period.

These lacklustre results are largely due to the underperformance of Truworths’ Africa division.

Truworths Africa saw its sales decrease by 1.1% in the 26-week period, with account sales down 0.9% and cash sales down 1.6%.

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

In contrast, Truworths’ Office UK segment reported a strong performance for the first half of the retailer’s 2025 financial year.

Despite the broader challenges in the UK market, retail sales in the Office UK segment increased in Sterling terms by 11.3% to £180 million.

This is a particularly impressive performance considering it comes off a strong base, with this segment having recorded retail sales growth of 15.6% to £162  million in the comparative period. 

Online sales in this segment increased by 7.0% in sterling terms in the first half of the retailer’s 2025 financial year and comprised 45.2% of total retail sales. 

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

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

Overall, Truworths expanded its store network in the 26-week period, adding a net 10 stores across both segments.

Truworths Africa opened 23 stores and closed 15, while Office UK opened six stores and closed four.

This brought Truworths’ total footprint to 898 stores, including 11 concession outlets – an increase in trading space of 1.4%.

Looking forward, Truworths expects the rest of its 2025 financial year to produce far stronger results.

It said group retail sales for the first seven weeks of the second half of the 2025 financial period increased by 6.3% compared to the corresponding seven weeks of the 2024 financial period.

The retailer’s trading space is also projected to increase by approximately 1% in 2025, with most of that growth coming from its UK segment.

In South Africa, Truworths expects discretionary spending to remain muted but said some macroeconomic factors – like inflation and interest rates – could contribute to a more positive trading environment and improved consumer sentiment.

“However, volatility and uncertainty in global economies remain a risk to the stability of the local economy and currency,’ the retailer said.

However, it added that management is committed to enabling revenue growth by enhancing the appeal and authenticity of Truworths’ aspirational fashion ranges while fostering strong loyalty among its existing customers.

“This strategy is further supported by ongoing investment in local design capabilities and improved supply chain efficiencies from the new distribution centre, following a phased go-live approach.”

In the UK, Truworths expects lower inflation and further interest rate cuts to provide some relief and a boost in consumer spending.

The retailer said it plans to build on this segment’s strong growth momentum.

This will be done by leveraging its strong relationships with the world’s leading footwear brands, continuing to provide an enticing offering to its loyal customer base, and ongoing investment in digital marketing and its eCommerce platform.

“Growth will be driven by the expansion of the Office store portfolio through new stores and the remodelling of existing stores,” the retailer said. 

“Through these strategic investments, Office aims to strengthen its market presence and deliver an exceptional shopping experience.”

Truworths declared a dividend of 317 cents, down 4.5% from its previous interim dividend.