South African upmarket fashion retailer Truworths reported a 4.6% fall in half-year earnings on Thursday, as squeezed consumers in its main markets in Africa reduced spending on clothes and shoes.
Source: Reuters/Lelethu Madikane
Following the rapid post-Covid rise in demand globally and the war in Ukraine which fuelled inflation, interest rates rose sharply in South Africa and elsewhere, eating into disposable incomes and dampening discretionary spend.
South Africa's consumer inflation has been trending down in recent months, allowing the central bank to cut rates. However, it ticked up to 3.2% last month from 3% in December.
In the coming months, Truworths - which also owns UK-based shoe retailer Office - expects lower inflation and further expected interest rate cuts in Britain to support consumer spending there.
Headline earnings per share for the 26 weeks to 29 December 2023 fell to 489.2 cents, down from 512.6 cents in the same period the prior year, its statement said.
Group trading profit, which excludes interest income, decreased 8.3% to R2bn.
The retailer, whose brands include Daniel Hechter, Uzzi and Naartjie, said group retail sales in the period increased 2.4% to R12.5bn.
The slower growth was largely due to its Africa unit, which reported a sales decline of 1.1% to R8.3bn during the period, which included Black Friday and Christmas trades.
"Discretionary spending is expected to remain muted in the months ahead, while some macroeconomic factors are contributing to a more positive trading environment and improved consumer sentiment," the retailer said, referring to its African markets.
Truworths' UK business reported retail sales growth of 11.3% to £180m ($227m), following its store modernisation and expansion programme, and e-commerce platform, it said.
Group retail sales post-reporting period improved, with growth of 6.3% in the seven weeks.
