Newsletter No 32/26August 2022
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Truworths shares rally nearly 12% on solid performance
By Katharine Child
A Truworths store in Illovo, Johannesburg. Picture: Freddy Mavunda
The stock price capped 10 consecutive days of gains on Wednesday, its best performance since 2013
Retailer Truworths’s share price leapt by as much 11.75% in intraday trade on Wednesday as investors rewarded the company for its record high headline earnings per share result.
The share price of the owner of EarthChild, Naartjie and YDE capped 10 consecutive days of gains on Wednesday, its best performance since 2013.
In SA, Truworths sells formal and evening wear in addition to high-quality children’s clothing, primarily on credit, with muted competition as most of its peers sell more casual attire or are cash-based.
Truworths said the improvement in earnings was organic. Competitors TFG and Mr Price have boosted earnings with acquisitions in the past two years with Mr Price adding kitchenware brand Yuppie Chef and discount retailer Power Fashion, while TFG bought Jet.
Truworths is likely to be benefiting from a return to the office and a need for formal and event wear as school matric dances and cocktail parties have resumed after the pandemic.
The aspirational retailer stands to benefit from rising interest rates, as about 70% of SA customers buy on account and its 12-month repayment option is interest bearing.
The company has faced tough times in the UK where it impaired almost R5bn in its investment in shoe chain Office, but in the past year has reported a double-digit sales increase and reduced rentals, with some loss-making stores closed as their leases ended.
The performance vindicates CEO Michael Mark’s decision to stay at the helm even as calls mounted for him to step aside as he has been the boss for more than three decades.
All Weather Capital’s Chris Reddy said it is “pleasing” to see that the growth was organic rather than acquisitive, adding that Truworths saw “improved sales and strong gross profit margins” while also ensuring good expense management.
“The share ticks a lot of boxes,” Reddy said, adding that it is one of the highest dividend payers in the sector and was supported by share buybacks and an undemanding valuation.
In SA, where Truworths has among the highest gross margins of clothing retailers, sales rose 5%, the retailer said in a recent voluntary update for the 53 weeks to July 3.
However, it noted that it did not increase prices in the past year in SA and in fact recorded deflation of about 1%.
Truworths will release its full-year results on September 6.
Investors are waiting to see if any of the revenue improvement includes provisions, money set aside for bad debt that is not used and is released back into the company’s earnings a year or more later.
By the JSE’s close Truworths’s share price had gained the most since mid-February, up 4.79% to R60. BL
allfashion Sourcing Cape Town
allfashion Sourcing Cape Town will be taking place alongside SA Menswear Week as part of The Week of fashion in 2022 on the 29th September to the 1st October.
allfashion sourcing Cape Town is a business-oriented market place for the textile and fashion industry, combining African creativity, design and manufacturing with international and local sourcing options.
This year’s edition will take place at Wonderland Film Studios and only a maximum of 50 highly curated stands comprising of fashion, footwear, apparel and accessories showcases will be on display.
For the first time in 2022, allfashion Sourcing exhibiting companies will be able to sell their goods directly on-site. This three-day event is free to attend and visitors can register by clicking here (https://bit.ly/3bryhar).
The allfashion Sourcing Young Designers competition winner will be announced during the event which will be a curtain raiser to some of SA’s top designers.
THERE ONLY 20 STANDS STILL AVAILABLE SO PLEASE BOOK YOUR SPACE TODAY!
Kathryn Frew, Show Director Kathryn.Frew@za.messefrankfurt.com | +27 (0) 82 063 2706
Ernest van Sitters, Sales Executive Cape Town Ernest.VanSitters@za.messefrankfurt.com | +27 (0) 62 443 0430
Berzacks appointed exclusive distributor for Coats group in SA
In an exciting development for the local SA sewn product supply chain during the month of July, Coats, the world’s leading industrial thread manufacturer, entered into an exclusive distributor agreement with Berzack Brothers (Pty) Ltd a wholly owned subsidiary of The Bidvest Group Limited.
Berzacks which was founded in 1932 and together with its division Bloch & Levitan is a wholesale distributor of industrial machinery and consumables to the clothing, luggage, upholstery and embroidery industries, with Coats’ wide range of sewing threads and ancillary products, the offering to the supply chain is enhanced.
As a leading local supplier to the industry, Berzacks is level 3 BBBEEE compliant and is able to leverage its distribution network with warehouses in Durban, Johannesburg and Capetown.
The new Coats division within Berzacks has integrated well with management committed to adding value to its very valued customers.
The most talked about Oscars dresses of all time
Anne Hathaway, 2013
Even her win for Les Mis couldn’t distract from the darts on this dress. In fact, she changed her mind at the last minute, opting for this Prada gown after costar Amanda Seyfried wore something similar to her original pick.
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