Truworths interim results December 2018
Revenue for the interim period was recorded at R10.896 billion (2017: R10.912 billion), gross profit increased by 1% to R5.326 billion (2017: R5.265 billion) whilst trading profit dropped by 4% to R1.643 billion (2017: R1.703 billion). Profit for the period attributable to equity holders of the company dipped to R1.550 billion (2017: R1.632 billion). Furthermore, headline earnings per share lowered by 5% to 361.8 cents per share (2017: 379.8 cents per share).
The directors of the company have resolved to declare a gross cash dividend from retained earnings in respect of the 26-week period ended 30 December 2018 in the amount of 249 South African cents (2017: 261 South African cents) per ordinary share to shareholders reflected in the company's register on the record date, being Friday, 15 March 2019.
Retail trading conditions in the Group's two major markets are expected to remain difficult over the remainder of the 2019 financial period. Our determination to react to environmental challenges, yet preserve our intrinsic business philosophy, has kept the business healthy and on track over the past few environmentally challenging years. We recognise some early positive signs that point to possible improvement in both major markets from the next financial period onwards.
South Africa: Truworths
Ongoing low economic growth, together with a weak labour market and high unemployment, will continue to depress disposable income levels. While consumer confidence among middle-income South Africans is positive and stable, retail spending is expected to come under renewed strain in the months ahead from rising utility costs and uncertainty ahead of the country's general election in May. Any power outages will put further pressure on sales performance.
Sales revenue is expected to benefit from the new e-commerce platform and the lay-by offerings in South Africa. The continued improvement in the health of the account portfolio, the ongoing growth in both new and total accounts in good standing, the strong cash flow and balance sheet, and the implementation of various strategic initiatives augur well for the medium-term prospects of Truworths.
Truworths' retail sales for the first seven weeks of the second half of the 2019 financial period increased 2.0% compared to the corresponding seven-week period in the 2018 financial period.
United Kingdom: Office
The fragile retail economy in the UK is expected to remain under extreme pressure amidst rising concerns over the faltering negotiations ahead of the end-March Brexit deadline. However, staff morale is high in the business despite the challenging environment. The key strategic initiatives in the coming months that will drive future growth in the UK operations include the 'Store of the Future' concepts in Office (Oxford Street) and in Offspring (Selfridges), and significant new developments in the highly successful e-commerce platform, which already contributes 33% of Office sales.
Office's retail sales for the first seven weeks of the second half of the 2019 financial period increased by 5.4% in Sterling compared to the corresponding seven-week period in the 2018 financial period.
Group: Trading space
Trading space is planned to increase by approximately 2% for the 2019 financial period (comprising 2% growth in Truworths and 5% decrease in Office), but to remain essentially unchanged in the 2020 financial period (Truworths 0% to 1% and Office 0.5% to 2%).