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TRU
TRU
Truworths International Limited - Business update
Truworths International Limited
(Incorporated in the Republic of South Africa)
(Registration number 1944/017491/06)
JSE Code: TRUNSX Code: TRW
ISIN: ZAE000028296
BUSINESS UPDATE
Truworths International Limited (`the Group") announces that sale of
merchandise for the 19 weeks to 5 November 2006 increased to R 1 597
million, 27% above the corresponding period in 2005. This amount
includes the non-comparable merchandise sales attributable to the Group"s
newly acquired controlling interest in the Uzzi menswear chain.
Uzzi is trading above expectation, and the integration of systems and
administrative structures is progressing well. If merchandise sales of
Uzzi were to be excluded, Group sale of merchandise would reflect an
increase of 25% above that of the prior period.
Group comparable store retail sales grew by 17% and product inflation was
1%.
Identity sales increased by 49% to R156 million with comparable store
sales growth of 22%.
The Group opened five Identity stores, three Truworths stores and a YDE
store, relocated three stores and renovated and extended nine stores
during the period.
A further six new Identity, seven new Truworths, two new YDE stores and
three store refurbishments are planned for the 2007 financial period. The
Group is expecting to increase overall trading space by 11% and to spend
R 119 million on store development during this period. By June 2007, it
is expected that the Group will operate ninety seven Identity stores.
While continuing to apply strict criteria for credit granting, the Group,
has managed to achieve solid growth in new customer accounts and in the
active account base. The quality of the debtors" book remains high and
compares well with sector benchmarks, notwithstanding marginally
deteriorating delinquency and net bad debt.
These indicators are in line with management expectations and have been
adequately provided for.
The tightening of monetary policy in response to rising inflation and
higher levels of consumer debt may soften consumer sentiment in the
retail environment. However with the further expansion of trading space,
market share gains and the continued emphasis on the fashionability of
merchandise, management is confident that trading for the festive season
and the remainder of the 2007 financial period will yield positive
growth.
The Group is proud of its support for and relationship with the local
clothing manufacturing industry and its association with the Cape
Clothing Cluster, which aims at enabling local manufacturers to become
internationally competitive. The board estimates that locally produced
units delivered to the Group will have increased by approximately 15% for
the 26 week period to December 2006 relative to the prior corresponding
period. This increase is due to the current positive trading levels,
combined with the benefits arising from the proximity of local suppliers
which enables them to respond rapidly to the Group"s needs for fashion
merchandise on a timeous basis.
The board expresses its reservations about the quota system applicable to
clothing and textile imports from China scheduled to be introduced with
effect from 1 January 2007. The board believes that the negative impact
on clothing prices and other unintended consequences have not been
adequately considered prior to the promulgation of these measures.
The Group is pleased to be one of the four foundation members of the
newly formed National Clothing Retail Association of South Africa (NCRF)
which it believes will play a key role in facilitating the contribution
to South Africa of the clothing retail sector.
The interim results of the Group for the 26 week period to 24 December
2006 are scheduled for release on or about 22 February 2007.
9 November 2006
Cape Town
Lead Sponsor: Barnard Jacobs Mellet Corporate Finance (Pty) Ltd
Joint Sponsor: Standard Bank
Date: 09/11/2006 04:19:07 PM Produced by the JSE SENS Department
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