Fashion retailer Trueworth on Thursday reported first-half profit growth slowed by 3.6% as South African shoppers cut back on discretionary spending in the face of high inflation and interest rates that eroded disposable income.
True Worth, owner of LTD Kids, said its earnings per share rose to 512.6 cents for the 26 weeks to December 31, after posting 10.3% growth in the same period last year. The company's shares fell nearly 3% in afternoon trading Thursday.
Group retail sales rose 8.2% to R12.2bn, driven primarily by Trueworth's UK-based footwear chain Office, as well as non-clothing areas such as cosmetics and mobile.
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Retail sales at Trueworth Africa, its largest business, which primarily sells clothing and footwear, fell 0.3% sequentially to R8.4 billion.
“(True Worth Africa's) retail sales were affected by adverse economic conditions and high interest rates leading to lower disposable income and lower consumer confidence,” the report said.
The company added that the scorecard reacted to the deterioration in the credit standing of South African consumers, resulting in lower credit extensions and a negative impact on credit sales.
Trueworth also said it was affected by port congestion in South Africa. As a result, the company said, “deliveries of finished goods in the second quarter were lower than expected,” which “adversely impacted peak trading sales.”
Office retail sales increased by 15.6% in pound terms and 33.1% in rand terms to R3.8 billion.
