Listed fashion retailer Truworths International has reported a 31% rise in its fully diluted headline earnings per share for the year to the end of June 2005, to 140,8 cents from 107,4 cents a year earlier.
The company declared a final dividend of 37 cents per share, which brings the total dividend for the year to 69 cents, a 44% increase on the 48 cents per share declared in 2004.
The Truworths group includes the retail chains Truworths, Truworths Man, Daniel Hechter and Identity. The results were in line with the company’s previous guidance from July 13, in which it forecast an increase of between 28% and 33% in its headline earnings per share.
Announcing its final results on Thursday, Truworths said its merchandise sales increased by 21% during the year to R3,3-billion from R2,7-billion a year earlier, while total revenue reached R3,5-billion versus R2,9-billion.
There was 9% growth in retail space through the opening of nine Truworths stores, one Truworths Man store and 12 Identity stores.
Comparable store sales rose by 14%, while product inflation was approximately 5%. All of the group’s merchandise divisions recorded strong growth, the company noted.
Truworths said it posted further gains in market share and productivity in terms of sales per square metre and per full-time employee.
Trading profit rose by 37% to R816,3-million from R597,6-million the previous year, gross margin improved by 0,4% and operating margin came in at 29,8%. Operating costs as a percentage of sales fell to 28% from 31% a year earlier.
There was a noticeable growth in credit uptake during the year from both new and existing accounts, Truworths said. Its debtors’ book increased by 25% to R1,2-billion, with active accounts now exceeding one million. Credit sales grew by 23% compared with 2004, and as a percentage of total retail sales were 74%, compared with 73% in 2004.
The return on average shareholders’ equity increased to 40%, and there was a 24% rise in net asset value per share to 403 cents.
Commenting on the outlook for the new financial year, Truworths said its merchandise sales for the seven weeks since June 30 have been “comfortably ahead of budget”. This reflects its belief that the benefits of low interest and inflation rates and improved disposable incomes, together with the further development of the structural changes evident in the South African economy, should continue to support a buoyant retail environment.
“Market share gains, further productivity improvements, continued reinvigoration of the group’s brands and measured expansion of trading space lead management to be optimistic about business prospects in the current year, even after having regard for the significant trading base established over previous years,” it said.
During the year, Truworths lowered its dividend cover to 2,1 times from 2,3 times, and undertook further share buybacks at a total cost of R55-million. It remained focused on the optimum use of its cash resources through suitable acquisition opportunities, share buybacks and the re-evaluation of its dividend cover, it noted.
Truworths stores posted an 18% increase in sales to R2,11-billion for the year, while Truworths Man recorded 21% growth to R575-million. Daniel Hechter saw total sales of R337-million for an increase of 28% over 2004 levels, and Identity notched up the highest gain of 43%, though off the lowest base, with sales totalling R247-million.
Young Designers’ Emporium, a relatively recent purchase for the retailer, had achieved 19% growth in agency sales to R149-million, the company revealed. Although its earnings are in line with management’s expectations, there are clearly opportunities for significant improvement in the coming years. — I-Net Bridge