Truworths hits the fashion spot again as profit increases 14%
August 20, 2009
By Florence de Vries
Retail analysts have commended retailer Truworths for "hitting the fashion spot" again in the year to June, increasing its headline earnings a share by 14 percent to R3.376 in a trading period characterised by conservative shoppers.
Sales of merchandise at Truworths, the parent company of Identity, Uzzi and YDE stores, grew by 11 percent to R6.2 billion, while comparable sales grew 5 percent with product inflation at 10 percent.
Michael Mark, the chief executive, said the group managed the risk of fashion exceptionally well in meeting customers' needs.
He compared the group to a portfolio, saying that Truworths had a thorough process through its buying programme, which essentially compensated for when some of the group's brands did not fare well.
"It has simply become a matter of balancing our portfolio properly," said Mark.
Though the group's comparable sales growth had slowed in the review period, analysts applauded Truworths' performance, saying it had always managed to hit the spot with fashion trends. "Even in a time where the consumer has less disposable income and is more discerning about spending money, they have been on trend," said Quinton Ivan, an investment analyst at Coronation Fund Managers.
According to Ivan, Truworths had managed to gain market share in its ladieswear department. "Their gross margins have picked up, which is a key indication of a fashion retailer calling the season," said Ivan.
According to Ivan, competitor Foschini's largest division, ladieswear, lost market share in the year to March because of supply chain issues, but managed to rectify this toward the end of its financial year.
"Foschini has regained market share, which must mean either Edgars or Woolworths have lost some," said Ivan.
Truworths increased trading space by 12 percent, following the opening of 18 Truworths, 19 Identity, 10 Uzzi and 1 YDE store. At the end of the period, the group had 495 stores.
Retail analyst Abri du Plessis from Gryphon Asset Management said the group's strong management had managed to deliver strong growth. "They are definitely a better clothing retail operator than many competitors," he said.
Shares of the group fell 0.37 percent to R37.21 on the JSE.
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