Truworths expects record full year earnings

JSE-listed fashion retailer Truworths says it expects to report its highest full year earnings ever for the pro forma 52 weeks ended 3 July 2022. It notes the latest performance has been supported by improved sales, strong gross profit margins and expense management.

In a trading statement released after the market closed on Tuesday, Truworths reported that it expects to see earnings per share (EPS) to shoot up by up to 58% to 760 cents, while headline earnings per share (Heps) is forecast to surge by up to 43%, to 745 cents.

“The previous highest Heps and EPS achieved by the group were in 2016 at 667.6 cents and 667.1 cents, respectively,” says the Cape Town-headquartered group.

“There have been no material acquisitions since 2016 so the results are reflective of organic rather than acquisitive growth,” it adds.

Read: Truworths’ sales jump as lockdowns ease

Truworths’ shares jumped over 5% to around R60.14 a share in morning trade on Wednesday following the release of the fashion retailer’s latest trading update.

Trading conditions

The fashion retailer’s record earnings forecast for the period comes despite it operating in a tough trading environment in its main markets – South Africa and the United Kingdom (UK).

In South Africa, the group’s business was negatively affected by the July civil unrests – which impacted operations mainly in KwaZulu-Natal (KZN) and Gauteng – as well as the KZN floods in April this year.

Both these events saw great damage to infrastructure and a halt to trading operations, the group noted in a business update in July.

Although trading conditions in the UK improved during the current reporting period with no Covid-19-related restrictions affecting trade, the group says its Office business continues to be impacted by the UK’s decision to exit from the European Union and Russia’s ongoing attack on Ukraine.

Despite these barriers to trade, the firm’s business update noted that group retail sales for the 53-week period beginning July 2022 will increase by 9% to R18.5 billion, higher than the R17 billion reported in the previous period.

The Truworths Africa segment is expected to see a 7.5% increase in retail sales to R14 billion, up from R13 billion reported in the previous comparable period.

Read: TFG reports first-quarter sales jump, shares rise

Its UK-based shoe chain Office, meanwhile, is forecast to see a 14% jump in retail sales in rand terms, bringing in R4.5 billion.

“Office continues to benefit from its strong online presence, with online sales contributing approximately 45% [2021: 63%] of retail sales for the current period during which stores remained fully open, unlike the prior period where store closures boosted the contribution from online sales,” the group noted.

Truworths will be releasing its 2022 year-end results on Thursday, 1 September 2022.