S.Africa’s Truworths International says credit environment improving

 

South African retailer Truworths International said on Thursday it thinks the worst is over for bad debts amongst consumers in Africa’s most advanced economy as its sales on in-store credit rose in the second half of its year ended June 28.
Truworths, which sells 70 percent of its goods on store cards, reported full-year sales growth of 8.2 percent to 11.6 billion rand ($903 million), buoyed by a rise in credit sales since January.
The retailer, which has clothing stores in Nigeria, Ghana and Botswana but makes the bulk of its profits and sales in South Africa, reported it had lowered its allowance for doubtful debt to 12.5 percent from 13 percent six months ago.
“We are experiencing a steady improvement in the credit environment after one of the longest credit contractions for many years,” Chief Executive Michael Mark said.
“The Group’s business model has withstood the downturn in the credit cycle well,” Truworths said.
Interest rate hikes of a cumulative 1 percentage point since the middle of last year has not affected sales, said Mark.
“The people who really could not afford it have been provided for already and the new credit is being more prudently granted and is probably of a better quality,” he said.
Fully diluted headline earnings per share (EPS) increased 4 percent to 592.1 cents.
Headline EPS is the main profit gauge in South Africa and strips out certain once-off items.
Shares in Truworths rallied 8.12 percent to close at 88 rand.
($1 = 12.8489 rand)
– (Reuters)

 
 
 

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