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Trading update for the 26 week period ended 25 December 2016
Truworths International Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1944/017491/06)
JSE Code: TRU
NSX Code: TRW
ISIN: ZAE000028296
TRADING UPDATE FOR THE 26-WEEK PERIOD ENDED 25 DECEMBER 2016
Truworths International Limited (the ‘Group’) experienced a challenging trading
environment during the 26-week period ended 25 December 2016 (‘the period’).
Factors contributing to the tough environment included low economic growth, high
product inflation resulting from rand weakness, reduced foreign revenues when
translated into rands arising from sterling weakness, and the negative impact of the
credit affordability assessment regulations in South Africa. This impact is reflected in
the marked decrease in active accounts and credit sales relating to those customers
that have been less than 12 months on the Group’s debtors book.
The high South African revenue base established in the corresponding prior 26-week
period ended 27 December 2015 (‘the prior period’), increased pressure on
consumers from rising inflation, especially in food prices, and a weak employment
market characterised by job losses and soft real growth in incomes have also
impacted the Group’s performance.
Group retail sales for the period increased by 21% to R10.2 billion relative to the prior
period, with cash sales growing by 53% while credit sales remained unchanged. Credit
sales comprised 50% (2015: 60%) of Group retail sales for the period. These metrics
are inclusive of the non-comparable retail sales of the Group’s UK business, Office,
which was acquired with effect from 4 December 2015. The reason for the change in
the credit:cash sales metric is that Office generates cash sales only.
Excluding the contribution from Office, retail sales at R7.4 billion as well as cash and
credit sales for the period remained unchanged relative to the prior period. It is to be
noted that the prior period retail sales growth was 15%, excluding the contributions
from the Office, Earthchild and Naartjie acquisitions. Credit sales comprised 69%
(2015: 69%) of these retail sales for the period. Like-for-like store retail sales, which
exclude those attributable to Office, decreased by 3% for the period, whilst product
inflation averaged 15.5%.
Office recorded retail sales for the period of £159 million (R2.9 billion) relative to the
prior period’s £160 million.
The debtors book increased to R6.4 billion and was 5% higher than at the prior period-
end. The percentage of active account holders able to purchase at the end of the
period was at 85% compared to 86% at the prior period-end and 82% at June 2016.
Against this background the Group’s diluted headline earnings per share (‘diluted
HEPS’) for the period are expected to decrease between 2% and 6%, to between
380.6 cents and 397.9 cents per share, relative to the prior period diluted HEPS of
403.8 cents per share.
Relative to the prior period adjusted diluted HEPS of 432.5 cents per share (calculated
by excluding the Office acquisition transaction costs), the Group’s diluted HEPS for
the period are expected to decrease between 8% and 12% to between 380.6 cents
and 397.9 cents per share.
Shareholders are advised that this trading update does not constitute an earnings
forecast, and that the financial information provided herein has neither been reviewed
nor reported on by the Group’s external auditors. The Group’s interim results for the
period are scheduled for release on or about Thursday, 16 February 2017.
12 January 2017
Cape Town
JSE Sponsor: One Capital
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