Truworths reported a decline in credit-based sales alongside a modest rise in cash purchases over the 26 weeks to 28 December, underscoring the strain on household finances despite tentative improvements in the macroeconomic backdrop. The fashion retailer said group retail sales were unchanged at R12.5 billion, reflecting weak discretionary demand in a market where it has historically relied on store credit to drive volumes.
Account sales accounted for 45% of group retail revenue, down from 47% a year earlier, as cash sales rose by 2.3% while credit sales fell by 2.7%. The shift points to more cautious borrowing behaviour among consumers and tighter lending standards by the retailer. Analysts note that higher interest rates over the past two years and elevated food and transport costs have limited appetite for additional debt, pushing more shoppers to reduce basket sizes or pay cash for essentials.
Pressure was most visible in Truworths Africa, where retail sales declined by 3.6% year on year. Account sales in the segment fell by 2.7%, while cash sales dropped by 5.8%, indicating that overall spending levels weakened even as the balance between payment methods changed. Credit still dominated domestic sales, with 71% of Truworths Africa turnover generated through accounts, slightly higher than last year, but the contraction in volumes suggests that fewer customers are making discretionary purchases.
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The retailer said consumers remain under financial pressure despite signs of improvement in the broader economy, including a firmer rand, easing inflation expectations and lower fuel prices, with the possibility of interest rate cuts later in the year. Economists argue that these indicators have yet to translate into a meaningful recovery in real disposable income, particularly for lower- and middle-income households that form the core of Truworths’ customer base, as reported by Bloomberg.
Truworths’ credit book continued to contract, with gross active trade receivables down 2.1% to R6.9 billion. While the number of active accounts edged up by 0.6%, the group said it deliberately slowed credit growth during the 2025 financial year, especially among higher-risk customers. About 82% of account holders were able to transact, while 13% of balances were overdue, a slight deterioration from the previous year. The data highlights the trade-off facing credit-led retailers: protecting the quality of the loan book while sustaining sales in a subdued environment.
Management indicated that there is scope to cautiously expand credit again but stressed that conditions remain difficult and lending will continue to grow only gradually. Retail analysts say this approach reflects the wider industry’s shift towards risk containment as consumer arrears rise and regulatory scrutiny of unsecured lending intensifies.
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In contrast, Office UK delivered stronger results, with retail sales rising 6.4% in sterling, supported by store refurbishments and a robust online platform. Digital channels accounted for nearly 46% of Office UK’s total revenue, reinforcing the role of e-commerce in offsetting weaker footfall. However, the performance of the UK business was not sufficient to materially lift group sales or earnings.
Despite some improvement in trading momentum since November, Truworths expects earnings per share and headline earnings per share to increase by no more than 2%. The outlook reflects limited pricing power and continued caution in extending credit. The group will publish its interim results for the six months to December on 26 February.
Broader retail data show that South African consumers remain defensive, with spending growth concentrated in necessities rather than apparel and footwear. Official figures indicate that household consumption has yet to recover to pre-pandemic trends in real terms, suggesting that retailers dependent on credit may face prolonged pressure on both volumes and margins, according to Statistics South Africa.