Truworths delivers 12% HEPS hike

South African fashion retailer Truworths recently announced a significant 12 per cent jump in headline earnings, accompanied by an 11.4 per cent increase in group retail sales over a 52-week period. The stellar performance was primarily attributed to the successful rollout of new store formats. In a recent interview with CNBC Africa, the CEO of Truworths, Michael Mark, shed light on the key drivers behind this remarkable achievement. Mark highlighted the outstanding performance of Truworths in the challenging South African economic landscape, where the company managed to navigate through various hurdles and deliver commendable results. Additionally, the UK segment of the business, Office, surpassed all expectations, contributing significantly to the overall impressive performance of the company. Despite the prevailing macroeconomic concerns, including inflationary pressures, Mark expressed confidence in the company's ability to manage costs effectively. He mentioned that Truworths had historically dealt with inflation by adjusting product units based on market conditions, allowing the company to maintain margins and navigate through fluctuating economic environments. Looking ahead, Mark emphasized the importance of capital expenditure in driving future growth. He revealed plans for substantial investments in a new distribution center and the introduction of new brands in South Africa, alongside remodeling and expansion of stores in the UK. When questioned about the company's online presence, Mark highlighted the contrasting performance between the UK and South Africa. While online sales accounted for a significant portion of revenue in the UK, particularly during the COVID-19 pandemic, the South African online market was still in its nascent stages but showing promising growth trends. Despite the cost implications of online operations, Mark affirmed the profitability of the division, attributing it to a strategic stock management system that optimizes delivery processes. In terms of future growth prospects, Mark identified the management of the debtors book and bad debts as crucial factors for Truworths' success. He expressed optimism about the company's potential to thrive in a growing economy and outlined a positive outlook for the business over the next two years. Mark concluded the interview by highlighting the UK segment as a key driver of growth with ample opportunities for expansion and development. Overall, Truworths' impressive performance and strategic initiatives position the company for sustained success in the coming years.