Truworths blames high unemployment rate and secondhand clothes for reduced sales




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CLOTHING retailer Truworths Limited has blamed high unemployment levels and low disposable incomes for the reduced sales volumes on the back of urgent calls for the implementation of economic stabilization measures.

Presenting the group’s financial performance for the year ended July 9 2023, the company said revenue of ZW$2,6 billion was realized out of which ZW$1,43 billion. Finance costs of ZW$375 million on the back of the monetary loss of ZW$207,9 million.

Units sold declined by 33.8% due to the suspension of ZWL$ credit from 1st of July 2022.

“High unemployment levels and low disposable incomes due to inflation had a negative impact on volumes sold, with customers resorting to buying products in the unregulated informal market at prices which the business could not compete against.

“Units sold were negatively affected by the informalisation of the economy which has resulted in cheap and fake imports selling at below local and international manufacturing costs. The business could not viablely compete against these imports,” the company said.

The company said ZWL$ cash sales value was negatively affected by price controls enforced by the FIU through the use of the official (exchange rate) in the sale of merchandise.

However, the business maintained competitive US dollar pricing to be able to compete on a US dollar basis, translating the US dollar price to ZWL price at the Auction Rate resulted in the uneconomic ZWL prices and loss of value.

Truworths said the informalisation of the economy which has resulted in cheap and fake imports selling at below manufacturing costs which the business could not compete against also took a knock on the business.

During the period, the debtors book declined as ZWL$ credit sales were stopped in July 2022 due to the increase in the prime interest rate to 200% per annum which made credit sales unviable for the business.