Truworths posted yesterday (Thursday) that its earnings increased despite the global macro environment remaining challenging throughout the current period as it declared a dividend.
In its group results for the 52 weeks ended July 2, 2023, the group said headline earnings were up about 12% to 873.3 cents.
The group also declared a final gross cash dividend from retained earnings of 245 South African cents, compared to the comparable period in 2022 of 205 cents.
Truworths said the global macro environment remained challenging throughout the current period. Low economic growth, high inflation, rising interest rates, and relatively low consumer sentiment continued to weigh on the retail sector globally in the aftermath of the Covid-19 pandemic and the invasion of Ukraine by Russia in February 2022.
“The group’s results for the previous 53-week period ended July 3, 2022, were materially affected by the consequential impacts of these events, including wide-scale global supply chain disruption, higher energy prices, pressure on food resources, and rising inflation.
“The prior period base of the Truworths Africa segment was further impacted by the civil unrest in July 2021 and flooding in April 2022 in parts of South Africa. In the Truworths Africa segment, current period trading continued to be impacted by pressure on consumer disposable income and discretionary spending in the current low-growth, high-inflationary environment," it said.
The group said the challenging macro environment was further affected by the energy crisis in South Africa, with significantly higher levels of load shedding observed from September 2022.
“The consequences of electricity load shedding on the economy and retail trade, in general, are far-reaching, impacting economic growth, job creation, and in turn, consumer disposable income.
“During the current period, the group spent around R40 million on back-up power solutions for its stores in South Africa, and incurred additional operating expenditure on diesel for back-up generators for distribution centres and stores,” Truworths said.
According to Truworths, at the current period-end, stores covering 87% of the Truworths Africa segment’s sales were equipped with alternative power, and the balance of 13% had historically not required alternative power, either because they did not experience load shedding or had sufficient natural and artificial lighting and could therefore trade manually.
“In the United Kingdom, trading conditions were much improved in the current period as tourism rebounded and workers returned to the office after all Covid-19-related restrictions were abolished in the prior period.
“However, consumer spending remained under pressure as a result of the fall in real disposable incomes that the UK has experienced since late 2021 which is commonly referred to as the cost of living crisis. Higher interest rates, unusually high inflation, and modest economic growth continued to weigh negatively on consumer sentiment. Despite the macro challenges the branded fashion footwear sold by Office proved to be a resilient category and traded well throughout the period,” it said.
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