Zimbabwe: Covid-19 Hits Truworths' H1 Results

A Zimbabwean receives a Covid-19 vaccine jab at Wilkins Hospital.

Listed clothing retailer, Truworths' performance for the half year to January 10, 2021, was subdued as effects of the Covid -19 induced challenges persisted.

The country implemented various levels of lockdowns beginning of March 30, 2020. Trading hours were also reduced in compliance with the regulations that resulted in depressed business operations and reduced disposable incomes.

For Truworths, units sold in the half year were 23,3 percent down on the prior year and this was the trend from July to December on a month by month basis compared to the similar months last year.

Figures from the clothing retailer show that in July, units sold went down 23,5 percent compared to same month in the prior year.

September fell the hardest with units sold at 32,1 percent below same month in 2020 while units sold in December were 26 percent weaker.

"December was negatively affected by the lockdown as we lost the last week of our trading month due to the lockdown. The week we lost is traditionally very busy with our back to school and back to work range.

"Overall, the half year was negatively affected by the Covid-19 business restrictions in particular the period July to September.

"The most negatively impacted area on trading volumes in the half year under review was Harare CBD, which happens to have our biggest stores," said chief executive officer Mr Bheki Ndebele.

In terms of financial performance, the group slid into a loss of $7 million from a profit position of $30 million during the comparable prior year period.

Basic loss per share for the period was 1,89 cents from basic earnings per share of 8,11 cents during the same period last year.

Total revenue for the period fell 16 percent to $137 million.

During the period under review, the business curtailed the granting of credit due to the hyper-inflationary environment. Resultantly, cash sales were 66,9 percent of total sales and credit sales were 33,1 percent of total sales.

The doubtful debt provision was 15,2 percent of gross debtors compared to 12,6 percent in the prior periods.

Trading expenses increased by 21,7 percent in hyperinflation terms.

The introduction of the foreign currency auction system helped improve product volumes and availability.

Additionally, through improved US$ sales, the group was able to import fabrics on a continuous basis though limited by disruptions in the overseas supply chain.

Gross profit margins held firm with no merchandise markdowns.

Although the business was closed for the months of January and February due to Covid-19 induced lockdowns, trading has been encouraging since re-opening on March 4 but not enough to offset the lost ground in January and February.

Merchandise and fabric supplies for winter were disrupted due to the lockdown in the region.

Truworths did not declare a dividend due to the need to finance increased working capital requirements in a hyper-inflationary environment with limited/ reduced supplier credit terms.

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