Truworths reported a 62,72% decline in net profit in the 52 weeks to July 8 after an increase in trading expenses.
CEO Temba Ndebele however pointed out to analysts at a briefing held in the capital on Wednesday that the comparison was against a rebound year of 2011, which saw the introduction of six months credit and high pent-up demand.
Ndebele said there was a jump in turnover figures since dollarisation if a company varied the credit terms on a six month basis. The group started dollarisation on a cash basis in 2009, with turnover of US$1,38 million, which had gradually improved with the introduction of credit terms. Turnover in the year-end period was 2,63% lower at US$22,989 million from US$23,61 million in the 53 weeks to July 10.
For the comparable 52-week period sales declined 1,1%. In terms of individual stores, Truworths sales were down 4,2%, Topics 4,1% while Number 1 stores recorded a 16,7% increase. On a like-for-like trading weeks, Truworths had recorded a 2,9% decrease, Topics was 3,1% lower while Number 1 grew 18%.
Trading expenses were at US$10,08 million from US$9,37 million last year. Gross margins were lower than last year at 50,7% (2011: 51,7%), after they were affected by increased marked down costs and increased loyalty discounts. Trading margin was at 4,9% from 10,1% last year after increased employment costs, occupancy costs and marketing costs.
FD Tinashe Chidovi said that employment costs were the big margin hitter as the company had taken an 18,18% increase in the basic wage, a 51% increase in medical aid costs and a 49% increase in pensions.
In the period, the group said November and December were below expectations due to delayed bonus payments, which ordinarily increase payments.
Ndebele said in the period, the group had managed to refurbish Truworths First Street at a cost of US$300 000. He said the group had fashioned it along the lines of the Sandton store , adding it would be the signature look at any of the new stores that they would open.
The group had also opened Number 1 stores at Batanai Gardens, which contributed 11,7% to chain turnover. A new store under the chain would be opened in Bindura.
Ndebele said work was being done on Truworths Ladies Bulawayo, including the addition of the Estee Lauder cosmetic srange.
There were 70 724 active accounts from 64 028 last year while trade receivables before doubtful debt allowance was at US$7, 28 million.