Truworths International has reported a decline in profits, citing subdued consumer spending in South Africa amidst global economic uncertainties. Despite a 2.4% increase in overall retail sales, reaching R12.5 billion, the group’s headline earnings per share fell by 4.6% to 489.2 cents. Trading profit also decreased by 8.3% to R2 billion, primarily due to foreign exchange losses and increased operational costs.
Truworths Africa saw a 4.6% rise in retail sales, with online sales growing by 38%, now contributing 5.8% of the division’s total sales. However, the retailer anticipates that discretionary spending in South Africa will remain weak in the coming months due to ongoing economic volatility. The company also acknowledges the growing competition from online retailers like Shein and Temu.
Conversely, the group’s UK business, Office UK, experienced strong growth, with retail sales increasing by 13.3%. This positive performance is attributed to store modernization, expansion, and a robust e-commerce platform. Online sales for Office UK rose by 7%, representing 45% of total retail sales. Truworths plans to expand its trading space, with Office UK expected to see a 10% increase.
Despite the profit drop, Truworths remains cash generative, generating R3.3 billion from operations. The group used these funds for capital expenditure and dividend payouts. However, the interim dividend was reduced by 4.5% to 317 cents per share.