Clothing retailer Truworths posted on Thursday a 20% rise in half-year sales, at the low end of its expectations, as seven interest rate hikes crimped consumer spending.
Truworths, South Africa’s largest clothing retailer by market capitalisation, said group sales grew to R3,018-billion in the 27 weeks to the end of December, up 20% from the same period the previous year.
It described trading as challenging. In January it said it had expected a 20% to 30% rise in half-year sales.
”The buoyant retail trading conditions of recent years slowed during the period as a result of the seven interest rate increases … and a general rise in the cost of living … and an increasing fuel price,” Truworths said in a statement.
South Africa retail companies have benefited from buoyant consumer confidence stoked by a growing black middle class and tax cuts, but the interest rate hikes since the middle of 2006 have started to curb spending.
Truworths said sales for the first seven weeks of the second half showed 16% growth compared with the same period the previous year, and that the retail environment was likely to remain tough.
Truworths also reported a 26% rise in half-year headline earnings per share to 159,9 cents, in line with the 20% to 30% rise it forecast in January.
Headline earnings per share is the key profit gauge in South Africa, and strips out non-trading, capital and certain extraordinary items.
It declared an interim dividend of 72 cents a shares, up 20% from the same period a year earlier. – Reuters