Truworths has reported lower first-half sales as its operations in SA and the UK continue to be impacted by Covid-19 and challenging economic conditions. Earnings are also likely to come in lower, further weighed down by an impairment of its Office chain of shoe shops.
In a business update for the 26 weeks to 27 December, the retail group said while there hadn’t been any further lockdowns in SA since it was allowed to open its stores in May, consumer spending remained subdued due to the ongoing severe negative impact of the pandemic and generally depressed economic conditions. In the UK, trading conditions had been exceptionally challenging amidst Brexit uncertainty, with the group’s stores having to close from 5 November to 2 December 2020, except for ‘click & collect’ orders. Since then, stores had been forced to close again due to another national lockdown.
For the period, group sales fell 8.5% to R9.7 billion, with SA sales down 6.8% to R7.3 billion and sales at Office falling 13% to R2.4 billion. It expected headline earnings per share (HEPS) to decrease by between 4% and 9% from last year’s 364.9c, while earnings per share (EPS) were likely to be down by 14% to 19% from 364.7c previously. The higher decline in EPS relative to HEPS was attributable to an impairment of £8 million in the current period of Office’s right-of-use assets in respect of retail store leases, as lockdown restrictions on non-essential retail in the UK and Europe continued to put pressure on store-based retailing.
Truworths said Office continued to benefit from its strong online presence, with online sales contributing approximately 59% of retail sales for the current period, up from 34% in the comparative period.
Truworths’ shares fell 0.1% to R36.12 on Friday. The update was released at the close of trade.
Main Image: Rendridge Mall