Harare - Listed clothing retailer Truworths Limited’s gross profit margins for the year ended July 08, 2018 improved to close at $6,850,272 compared to $4 929 207 in 2017 due to the change in the sales mix and increased sales at full margins.
In a statement accompanying the Group’s financial results, Chairman Chief Executive Officer Bekithemba Ndebele said Group merchandise sales for the 52 weeks to 08 July 2018 were $13,458,048.
He said the business reduced its credit offering for high price points and low margin Home and Living product range.
“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 50.9 percent compared to 40.2 percent in the prior period.
“Trading expenses reduced by 6.5 percent from the prior period. Operating profit of $2 026 119 was achieved and a profit before tax of $1 114 891 was achieved.”
Ndebele said in the period under review the number of accounts increased by 3.1 percent over the prior period to 13 744 compared to 11 964 in 2017.
He said the allowance for doubtful debts as a percentage of gross trade receivables remained the same at 9.4 percent and in monetary terms the doubtful debt allowance decreased by 0.4 percent.
At period end 71.5 percent of the group’s account holders were able to make purchases compared to 66.9 percent in 2017.
During the reporting period the business generated a CASH EBITDA of $2 909 750 after net working capital of $326 005, interest payments of $911 228 and net capital expenditure of $70 553, a positive cash generation of $1 601 961 was achieved, and this was applied to reduce borrowings by $1,583,332.
Ndebele added that the business did not access any foreign supplier credit terms and had to make upfront payments for all foreign purchases.
Local supplier credit terms during the period under review were reduced and in most instances with payments upfront being made.
He said the Board deemed it prudent not to declare a dividend due to the need to finance increased working capital requirements in an inflationary environment with limited or reduced supplier credit terms.
Truworths believes Ndebele said shortages of foreign currency will continue to pose a challenge to product availability and will negatively affect product supply and sales in the near future.
“Resurgent inflationary pressures will negatively affect consumer disposable incomes and confidence.”
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