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Truworths profits down

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ONE of the country’s leading retail chains, Truworths says prudent credit risk management will remain in place even if the credit environment is expected to deteriorate due to the erosion of consumer disposable income.  

Report by Business Reporter 
Outlets under the group include Topics and Number 1 stores.  In the 52 weeks to July 8, the retail chain recorded a 49,5% decline in retail trading profit, as a result of lower gross margins.
The decline in gross margins was attributed to increased promotional activities with discounts accounting for 6,7 % of turnover up from 4,8% in the prior year.
“Group retail sales for the 52 weeks ended July 08 declined by 2,3% compared to 53 weeks to July 10 2011,” Truworths chairperson Chris Peech said in a statement accompanying the year-end financial results.
Revenue for the group was slightly down at $22,9 million while the number of accounts were up 10,5% to 70 724. Gross trade receivables grew by 23,3% attributed to the increase in credit terms by one month and a jump in credit sales in the last quarter.
Finance income was down 10,7% as a result of a better performing debtors’ book. Net bad debts as a percentage of credit sales, was down to 1,8% from 2,2% while doubtful debt allowance for the period under review was 4,5% compared to 5,3% in the comperative period.
“Cash was utilised in operations to fund an increased debtor’s book and an increase in the value of stock due to a change in merchandise mix and was funded by an increase in borrowings,” Peech added.
Number 1 stores recorded a 16,7% spike in its merchandise sales, while Truworths and Topics recorded declines of 4,2% and 4,1% respectively.

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