HARARE, March 10 (The Source) – The clothing retail group, Truworths on Friday reported a 36 percent drop in revenue for the six months to January 8, 2017, from $12,15 million last year to $7,79 million on the back of waning demand.
Sales of individual chains,Truworths, Topics and Number 1 dropped by 40,3 percent, 43 percent and 4,3 percent respectively.
Trade receivables declined by 2,7 percent on the back of reduced sales on credit, though a 36,8 percent increase in the number of accounts opting for 12 month credit reduced the impact on the decline.
Credit defaults rose in the period.
“The net bad debt experience was worse than the prior year with write offs increasing by 225,6 percent and recoveries reducing by 58,6 percent. All writes offs had been adequately provided for,” said chief executive Bekithemba Ndebele.
The company said eight percent of the gross trade receivables was set aside as a provision for bad debts and in monetary terms, provision for bad debts was 23 percent higher than the comparable period last year.
Ndebele said gross profit margin went down from 46,3 percent last year to 38,1 percent on the back of product discounts to stimulate sales.
Trading expenses, excluding trade receivables costs, fell by 17,2 percent in the period under analysis.
However, the company recorded an operating loss margin of negative 20,2 percent from a 4 percent profit margin achieved in the same period last year and is considering reducing its trading space.
“Trading conditions are expected to remain extremely difficult and the business will have to reduce trading space in line with the trading densities,” said Ndebele.
The outlook remains dim, Ndebele said, adding that foreign currency shortages will negatively impacted product availability and pricing while gross profit margins will remain suppressed by the waning aggregate demand.