Truworths posts 7.3 percent drop in annual profit, appoints David Pfaff to COO

In a tough economic environment in South Africa and in the UK, Truworths Group said that its retail sales for the 52-week period ended July 1, 2018 remained unchanged at 18 billion rand (1.2 billion dollars). Relative to the 53-week prior reporting period ended July 2, 2017, Group retail sales decreased by 2.7 percent. The company added that headline earnings per share (HEPS) and diluted HEPS decreased by 1 percent to 615.7 cents and 1.3 percent to 612.7 cents respectively relative to the comparable prior period. Relative to the 53-week prior period, HEPS and diluted HEPS decreased by 7 percent and 7.3 percent respectively.

The company also announced that during the period Hans Hawinkels and Maya Makanjee were appointed as independent non-executive directors of the company and that the board has resolved to appoint David Pfaff, the new Chief Financial Officer and an executive director of the company, to the newly created role of Group Chief Operating Officer (COO). The company added that Pfaff who was appointed as CFO in March 2013 will now be responsible for retail store operations in addition to his existing portfolio of credit risk, credit operations, information systems and finance.

Review of Truworths’ annual results

The company added that retail sales for the Truworths Africa segment increased by 0.8 percent, with cash sales increasing by 2.6 percent and account sales being unchanged. Relative to the 53-week prior period, Truworths’ retail sales decreased by 2.1 percent, with cash sales unchanged and account sales decreasing by 3 percent. Account sales comprised 69 percent of Truworths’ retail sales. Comparable product deflation (excluding the new Office London footwear chain launched in South Africa and Loads of Living acquired during the period) averaged 1.4 percent.

Retail sales for the Group’s UK-based Office segment decreased by 2.5 percent in pound sterling relative to the comparable prior period. Relative to the 53-week prior period, Office’s retail sales decreased by 4.5 percent to 281 million pounds (357.7 million dollars).

Truworths added 32 stores across all brands during the period, resulting in an increase in trading space of 3.2 percent (Truworths 3.3 percent increase and Office 0.9 percent increase), while Loads of Living accounted for 13 of the new stores. At the end of the period the Group had 969 stores (including 40 concession outlets).

Truworths’ trading profit up 9 percent

The Group’s gross margin was stable at 52.4 percent, while Truworths’ gross margin increased to 55.5 percent. Relative to the comparable prior period trading profit increased by 2.2 percent to 2.5 billion rand. The company added that despite the tough South African consumer environment, Truworths’ trading profit increased by 9 percent relative to the comparable prior period. However, the company said, difficult trading conditions affecting retailers in the UK was evident in the Office segment where trading profit decreased by 32.3 percent in pound sterling relative to the comparable prior period.

The company announced a final cash dividend of 159 cents per share, bringing the annual dividend to 420 cents per share compared to 452 cents per share in 2017.

Picture:Truworths website