CLOTHING retailer Truworths will adopt a cautious approach in granting credit to customers, as it focusses on growing profitability by increasing cash sales.
In a statement accompanying the group’s financial results for the year to July 11, 2021, chief executive Bekithemba Ndebele said the company’s revenue declined to $286 million compared to $342 million in the prior year due to the Covid-19 lockdowns while after tax loss was at $67 million.
“The business remains focussed on growing profitability sustainably. 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. Any future hard lockdowns will obviously have a negative impact on business performance,” he said.
During the first half of the year, units sold were 23,3 percent lower and further declined 59,3 percent during the third quarter of the year. The group’s fourth quarter saw improved sales as units sold increased 18,2 percent.
Ndebele said the second half of the reporting period was affected by closure of the business for two months in January and February due to Covid-19 lockdowns.
“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 a trading loss for the quarter and half year,” Ndebele said.
Due to the lockdown in January and February, the factory did not receive the specialised winter fabrics for garment manufacture.
“The retail chains relied on purchasing the limited and non-exclusive ranges from local manufacturers. Stock turnovers were good and there were no markdowns. Gross margins were firm,” he said.
On credit management, the company’s book grew by 152,8 percent and 84,8 percent of the customers were in good standing and able to purchase compared to 80,3 percent in the prior year. The doubtful debt allowance as a percent of gross debtors was 6,7 percent compared to 13,4 percent in the prior year.