Listed clothing manufacturer and retailer Rex Trueform Clothing Company has reported a jump in headline earnings per share for the year to the end of June 2005 to 62,5 cents from a restated 19,3 cents a year earlier.
The board declared a dividend of 25 cents per share for the year, up from 20 cents in 2004.
The headline earnings were within the range of 60 to 66 cents per share the company forecast in its trading statement released on Tuesday, while the dividend cover was set at 2,5 times, versus 1,0 times in 2004.
Earlier this year, the company was forced to close its loss-making clothing factory in Salt River, Cape Town, due to tough competition from imports, resulting in the retrenchment of 984 employees. It still retains its factory at Atlantis and its Queenspark retail clothing chain.
As a result of losses arising from the sale of the factory and costs related to the retrenchments, the group’s loss for the year from discontinued operations totalled R39,9-million.
Thus put a dent in the group’s performance, as continuing operations saw revenue rise to R312,5-million, up from R309,7-million a year earlier.
Net operating income was reported at R23,9-million versus R15,7-million the previous year, with profit from continuing operations at R18,4-million.
After taking account of the plant’s losses, the group recorded a loss for the year of R21,5-million, compared with a profit of R3,9-million in 2004. However, headline earnings rose to R12,6-million from R3,9-million a year earlier, resulting in the improvement in headline earnings per share.
The group’s retail clothing chain Queenspark experienced significantly improved profitability over the year, with revenue from the retail operation rising to R286,8-million from R282,1-million the previous year, and net operating income growing to R22,4-million from R13,4-million on the back of substantially higher margins.
During the year, Rex Trueform opened new Queenspark stores at La Lucia Mall and Musgrave in Durban, as well as Clearwater in Johannesburg. The group’s flagship store in Sandton was expanded to cope with growing demand.
Plans for the new year include the opening of new stores at George and Paarl in the Western Cape and the Eastgate shopping centre in Johannesburg. All of these openings can be financed via cash, without recourse to borrowings, the company noted.
Following an agreement with unions and fellow clothing manufacturer Brimstone Clothing Corporation, part of the listed Brimstone Investments, the group’s Salt River factory premises will be leased to Brimstone on very favourable terms, thus enabling it to re-employ a number of the workforce, all of whom had been paid full retrenchment benefits at rates well in excess of the statutory rates.
Rex Trueform will finally cease manufacturing at Salt River by the end of this year.
Looking ahead, Rex Trueform said plans are in motion to capitalise on further opportunities presented by the strong consumer market. Prospects for the restructured group have improved substantially following the closure of the Salt River operations, further enhanced by the expansion of the retail capacity.
After the payment of retrenchment costs, almost R58,6-million in cash remains to support further growth initiatives.
Meanwhile, African & Overseas Enterprises, Rex Trueform’s listed holding company, announced it expects headline earnings per share of between 54 and 58 cents for the year to the end of June 2005, compared with restated headline earnings of 15,8 cents in 2004.
Earnings for the year will be negative, resulting in a loss of between 105 and 115 cents per share, it added. — I-Net Bridge