• Revenue grew by 46% during the half-year to January 2022
  • The group recorded a PAT of ZWL 106 million from a loss last year
  • However, votality in the economic environment remains a concern

 

Harare- ZSE- listed clothing retailer, Truworths says the outlook for the remaining two quarters for the full year ending July 2022 remains gloomy due to a deteriorating economic environment which will continue to hinder normal trading. 

 

In a statement accompanying the half-year financials for the period ended 9 January 2022, the Group said it continues to incur irregularities due to the 20% retention on US Dollar sales liquidated at the official rate, inflationary pressures due to exchange rate volatility and the lag in consumer income growth. 

 

Zimbabwe is currently facing one of the worst inflationary pressures globally caused by exchange rate volatility which is crashing away the value of customers’ income. In turn, inflationary pressures will reduce consumer disposable income.

 

“The 20% retention on US Dollar sales liquidated at the official rate will negatively affect the Company’s cash flows and profitability as it is effectively a tax on gross revenue,” the Group said in a statement accompanying the half-year financials. 

 

“The “managed exchange rate” in which local retailers have to price their goods will harm the cash flows and profitability while the resurgence of inflationary pressures necessitates that the business reduces its exposure on Credit sales and focuses on Cash sales.”

 

As a result, “The lag in consumer income growth relative to increased inflationary pressures will reduce consumer disposable income,” added the Group. 

 

Meanwhile, revenue grew by 46% to ZWL 314 million from ZWL 221 million recorded during the comparative period in 2021 while the Group made a profit after tax of ZWL 106 million from a loss of ZWL 11 million encountered last year. 

 

“Revenue performance was adversely affected by the 20% retentions on US dollar sales which were liquidated at the heavily discounted Auction rate compared to the market rate,” said the Group. 

 

Credit sales advanced to 38.2% from 33.1% with cash sales growing to 61.8% from 66.9% during the same period in 2021.

 

“There was an increase in participation in credit sales due to increased credit granting as a month on month inflation eased,” the Group added. 

 

“The Business will focus on improving cash sales and productively controlling costs.”

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