Truworths International lower its interim cash dividend amid modest sales growth

Truworths International’s interim cash dividend fell by 4.5% to 317 cents after merchandise sales through its retail stores increased by only 2.5% in the 26 weeks to December 29, but the outlook has improved.

Merchandise sales came to R12.1 billion. Retail sales were up 2.4% to R12.5bn. The operating margin slipped slightly to 22.5% from 24.5% at the same time a year before. Headline earnings a share fell 4.6% to 489.2 cents.

The balance sheet remains healthy, with net cash at R1.2bn, versus net debt of R124m of December 31, 2023.

Truworths directors said group retail sales for the first seven weeks of the second half of the 2025 financial period increased by 6.3% over the same period last year, with account and cash sales both increasing by 6.3%.

Retail sales in Truworths Africa increased by 4.6% in the seven weeks, and in Office UK, it was up by 13.5% (in Sterling). Trading space was projected to increase by about 1% for the 2025 year, comprising increases of 0.5% in Truworths Africa and 10% in Office UK.

In South Africa, Truworths’ directors expect discretionary spending to remain muted in the months ahead, while some macroeconomic factors are contributing to a more positive trading environment and improved consumer sentiment.

These factors include the sustained low inflation rate, which is well within the SA Reserve Bank’s target range, and interest rate relief with a combined reduction of 75 basis points over the past five months. However, volatility and uncertainty in global economies remain a risk to the stability of the local economy and currency.

The group management aim to boost revenue growth by enhancing the appeal and authenticity of Truworths’ aspirational fashion ranges, while fostering stronger loyalty among the more than 3.6 million account and loyalty customers who shopped with the group over the last 12 months.

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

In the UK, lower inflation and further expected interest rate cuts should support consumer spending in the months ahead, they said.

Growth momentum would be built by leveraging strong relationships with the world’s leading footwear brands, continuing to provide an enticing offering to customers across the Office and Offspring brands, and ongoing investment in digital marketing and the e-commerce platform.

“Growth will be driven by the expansion of the Office store portfolio through new stores and the re-modelling of existing stores. Through these strategic investments, Office aims to strengthen its market presence and deliver an exceptional shopping experience,” directors said.

In the past six-month period, Truworths Africa’s retail sales decreased 1.1%. Account sales decreased by 0.9% and comprised 70% of the segment’s retail sales. Cash sales fell by 1.6%. Online sales continued to show good growth, increasing by 38% and contributing 5.8% to Truworths Africa’s retail sales.

The group’s Office UK segment continued its “impressive trading performance” in the six months, driven by its store modernisation and expansion program, its e-commerce platform, and well-established brand partnerships.

“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, following a strong performance in the prior period which recorded retail sales growth of 15.6% to £162m.

Online sales increased by 7% (in Sterling) and comprised 45.2% of total retail sales compared with 47.1% at the same time a year before. In rand terms, retail sales for Office UK increased by 9.9% to R4.2bn.

Truworths' share price closed 2% lower at R78.47 on the JSE on Friday, marginally below the R80.74 it traded at the same time last year.

BUSINESS REPORT