HARARE: Truworths Limited group merchandise sales were 3,6% lower for the year to July 12 at $21,1 million due to low spending by customers. In the 52 weeks ending July 6, 2014, sales were $21,97 million.
Group chairman Christopher Peech said the group retail sales for the first 11 weeks of the new financial year are 20% above the corresponding period in the prior year.
“With the deteriorating consumer and credit environment, the group will continue to focus on the management of trade receivables to ensure improvement and enhance the quality of the book and the cash flows. The business will continue to manage operating costs productively and manage working capital levels in line with the current trading levels,” he said.
Clothing retail companies have been facing challenges due to stiff competition from imports and second hand clothes that have flooded the local market. The sector has also been affected by the low disposable income and credit crunch in the financial services sector that has resulted in less people accessing credit from the sector.
During the period under review, the number of Truworths accounts increased by 4,3% over the comparative period to 79 960. Of these, 8 258 had signed up for the in-store credit card compared to 5 270 in the comparative period.
Trade receivable increased by 32% on the back of increased sales in the second half of the financial year towards year end the introduction of 12 months credit, which at year end was 21,4%.
During the financial year debtors values in arrears, hence interest bearing were little changed from the prior period, resulting in only a 2,9% increase in debtor’s interest receivable.
The gross profit margin decreased to 47,2% from 50,5% the prior year as a result of the introduction of the home ware range which carries a lower margin. “Trading expenses, excluding debtors costs, decreased by 8,5%. The operating margin decreased from 2,2% in the prior year to 0,7%,” he said.
