Truworths reports subdued performance
LIVINGSTONE MARUFU
Listed clothing apparel Truworths reported a subdued performance for the year to July 11, 2021 due to market volatility and lockdown regulations that disrupted trading.
The company swung into a loss of ZWL$45.3m in the period under review from a profit of ZWL$18.3m in the prior comparative period.
This was after its revenue fell 16% to ZWL$286.9m in the reviewed period from ZWL$341.6m in the same period the previous year.
“The business translated its nostro sales and foreign currency monetary assets at the auction rate, despite the existence of a wide disparity between the auction rate and the parallel market rate.
“Translating nostro sales at the auction rate had the negative impact of suppressing the reported turnovers,” Truworths said.
“The second half of the reporting period was affected by the closure of the business for two months in January and February due to Covid-19 lockdowns. The business was classified as non-essential hence the closure.”
The company’s units were 23.3% down in the first half of the financial year but rebounded in the last quarter.
Truworths said the closure of the business in January and February resulted in a loss of sales for the two months.
“In the absence of a relief package, the business incurred the full operating costs for the months of January and February which resulted in trading loss for the quarter and half year.
“The factory did not receive the specialised winter fabrics for garment manufacture due to the lockdown in January and February,” the company said.
The retail chains relied on purchasing the limited and non-exclusive ranges from local manufacturers.
Truworths listed stock turnovers were good and there were no markdowns.
Gross margins were firm.
On credit management, the book grew by 152.8 % and 84.8 % of the customers were in good standing and able to purchase compared to 80.3 % in the prior year.
The doubtful debt allowance as a percentage of gross debtors was 6.7% compared to 13.4% in the prior year.
The company’s current working capital dwindled to ZWL$72.3m during the period under review from ZWL$120.5m during the previous period.
Given the company’s standing, the directors deemed it prudent not to declare a dividend for the year.
In the outlook, the business remains focused on growing profitability sustainably.
Truworths said consumer incomes have not recovered to pre-devaluation levels hence credit granting will remain cautious and the emphasis will remain on increasing cash sales participation.
A possibility of any future hard lockdowns will have a negative impact on business performance as the company is deemed as a non- essential, it said.
The company is making some efforts to strengthen its online trading to counter the effects of probable lockdowns which may be imposed to contain the rampant Covid-19 pandemic.
