Forex shortages cripple Truworths’ product supply

Harare – Listed clothing retailer, Truworths Limited said product volumes and availability during the year ended July 7, 2019 were constrained due to a shortage of foreign exchange and local liquidity which adversely affected the local supplier base.

Most business operations in Zimbabwe are crippled due to the persisting volatility in the economy, which on the other end is driving inflation, thus reducing consumer spend.

In a statement accompanying the Group’s financials for the period under review, Chief Executive Officer Bekithemba Ndebele said the company has turned to in-house manufacturing of some product lines to try close the supply gap.

“We expect the pressure on discretionary consumer spending and foreign exchange shortages to persist in the short to medium term. This will negatively affect volumes and affordability,” Mr Ndebele said.

“Post year-end to improve on product availability and affordability, our in-house factory commenced manufacture of men’s trousers and shirts for Topics and Number 1 utilising cotton fabrics from local mills.”

The Group, which operates three chain store lines trading under the banners, Truworths, Topics and Number 1, reported positive financial performance during the period under review, which however, should be treated with caution cognisant of the changes in reporting currency which makes a like for like comparison with prior year performance distortive.

Mr Ndebele said that Group merchandise sales for the 52 weeks to 07 July 2019 were ZWL$17,653,040.

This compares to $13,458,048 recorded over the same period last year.

“Due to the change in the sales mix and increased sales at full margins (no markdowns in the reporting period), gross profit margins improved to 64.5% compared to 50.9% in the prior period,” Mr Ndebele said.

“Trading expenses increased by 30.7% from the prior period.”

Profit for the period increased by 247% to ZWL$2.8 million compared to ZWL$0.807 million recorded in the prior comparative period, while revenue scaled 26% to ZWL$21.2 million compared to ZWL$16.9 million in the previous year.

Mr Ndebele said the number of accounts increased by 0.5% over the prior period to 92,207.

“12,870 (2018: 13,744) of these had signed up for the Instore Credit Card at period end,” he said.

Equity Axis News

Raynold Mhotseka

Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment. He can be contacted through the following email links, rayjnr.mhotseka@gmail.com and raynoldm@equityaxis.net.

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