Business

Truworths continues to bolster backup power generation capacity

Fashion retailer Truworths says it is adopting a proactive approach to the country’s power crisis and plans to insulate the rest of its turnover by extending backup power solutions to stores that are still vulnerable.

The JSE-listed retailer is already ahead of its peers, having insulated at least 80% of its turnover from the impacts of load shedding by installing alternative energy solutions.

Soldiering on

It says this soldiering on by the group to complete its load shedding insulation project will come with even more cost pressures. This, as consumers and businesses battle tight economic conditions marked by rising interest rates and inflation.

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“The Group continuously assesses the backup power needs of its stores and will install additional or extend existing backup power solutions where appropriate,” it said.

ALSO READ: Truworths downplays value retail pilot of new Primark stores

“Notwithstanding these efforts, load shedding is likely to have had a negative impact on retail footfall, and consequently on retail sales, especially in malls without back-up power.”

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South Africa is currently experiencing its worst days of load shedding with Eskom implementing Stage 6 of power cuts indefinitely last Sunday.

Releasing its interim financial results for the 26 weeks to 1 January on Thursday, the retailer said it is evident that the consumer is under immense pressure as it has seen an increase in demand for its account offering over the period.

The group reported a 13.7% increase in retail sales to R11.3 billion with account sales making up 52% of this figure in the period, a 16.5% increase compared to the previous period. Account purchases by customers in South Africa are much higher, with credit sales making up 70% of retail sales for the Truworths Africa segment.

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With cost pressures, led largely by the country’s energy crisis, on the rise, Truworths has had to pass on some of that pressure to the consumer.

ALSO READ: The Foschini Group also sees credit sales pain

In its half-year update, the fashion retailer reported that it has seen retail selling price inflation averaging 13.3% for the current period.

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This is significantly higher than that reported in 2021, when the company instead saw product deflation of 2.4%.

“Consumer disposable income is expected to remain constrained in the medium-term as inflationary pressures from higher food, fuel, electricity and cost-of-living expenses are compounded by rising borrowing costs,” the group said.

“The response to our new retail concepts and brands developed over the past two years has exceeded expectations and we will continue to refine and invest in them. At the same time we will grow our in-house design capability to bolster the supply chain and further enhance speed to market,” group CEO Michael Mark added.

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Key metrics

Despite the pressure brought on by load shedding on the country’s economy, the retailer managed to post growth for the half year.

Truworths owns or operates brands like Identity, LTD, Earthchild, Loads of Living, Office London and YDE.

Headline earnings per share for the period grew by 10.3% 494.6 cents. The group maintained its gross profit margins at 53.5%, while the operating margin fell slightly to 24.7% from 26.5% in the previous period.

The retailer’s net asset value strengthened by 12.9% to 1 970 cents per share.

On the back of its performance this period, Truworths declared an interim dividend of 320 cents, up 6.7% on the previous period. The dividend – totalling R777 million – was funded using the R1.7 billion the retailer generated from its operations.

The rest of the cash generated from operations was used to fund capital expenditure (R392 million) as well as the group’s R28 million share buyback programme.

This article originally appeared on Moneyweb and was republished with permission.
Read the original articlhere.

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By Akhona Matshoba
Read more on these topics: energyEskomfashion