Listed South African fashion retailer Truworths International has reported a 33% increase in its fully diluted headline earnings per share for the 26 weeks to the end of December 2005, to 90,4 cents from 68 cents in the year-earlier period.
The company declared an interim dividend of 44 cents per share, a 38% increase on the 32 cents per share distributed at the halfway stage of its 2005 financial year.
Truworths owns the retail clothing chains Truworths, Truworths Man, Daniel Hechter, Identity and Young Designers’ Emporium (YDE), among others. The group restated its previous year results in line with its adoption of International Financial Reporting Standards.
Announcing its interim results on Wednesday, Truworths said total revenue rose by 22% to R2,17-billion from a restated R1,77-billion a year earlier. Merchandise sales grew by 23% to R2-billion, and gross profit was 22% higher at R1-billion versus R859-million the previous year.
Trading profit, meanwhile, posted an impressive 34% rise to R486,8-million from R362,9-million, while profit for the period, at R415-million, was 32% up on the R314-million recorded at the interim stage in the previous year.
Truworths CEO Michael Mark revealed the company has agreed to buy a stake in Uzzi, a niche retailer with 24 stores in the upper-end male fashion market. The agreement is subject to a due-diligence investigation and approval by the Competition Commission.
Truworths also increased its interest in YDE to 100% by buying the remaining minority shareholding. It first bought 75% of YDE in December 2003.
Commenting on the results, Mark said the contribution by the growing middle class to the company’s improvement in sales of clothing, footwear, cosmetics and jewellery was a significant feature of buoyant retail performance.
Sales growth across the group included comparable store sales growth of 15%, with product inflation of approximately 3%. Trading space increased by 6% through the opening of six Truworths and eight Identity stores.
“Larger trading areas at Truworths and Identity, where the emporium and store formats have been successfully refined, boosted sales,” he noted.
Truworths’ women’s wear sales were 19% higher at R1,3-billion, while those at Truworths Man were R375-million, up 26%. Daniel Hechter posted a 27% sales increase to R218-million, up 27%; and Identity’s sales, at R173-million, rose by 45%. Finally, YDE improved agency sales by 13% to R86-million.
The group’s operating margin improved to 31%, with gains in market share, sales per square metre and per full-time employee, Mark revealed. Expenses as a percentage of sales fell to 28% from 30%, while the overall gross margin was 52%.
Mark said the account base across Truworths, Identity and YDE amounted to approximately 1,5-million customers, thanks to good growth in new customer accounts and in the active account base. Credit sales represented 74% of total retail sales. The number of accounts able to purchase was maintained at 87% for Truworths customers.
He said that although the group utilised cash on share buybacks and significant expansion of trading space, it remained in a solid cash position, with cash and cash equivalents amounting to R637-million. Attributable cash flow per share increased from 97 cents to 101 cents.
Looking ahead, Mark said sales for the first eight weeks since December 31 were comfortably ahead of budget.
“With further expansion of trading space, market-share gains and continued focus on fashionable merchandise, management is confident that trading in the second half will yield further positive sales growth,” the CEO concluded. — I-Net Bridge