Clothing retail giant, Truworths -Zimbabwe (Truworths) suffered a significant decline in unit sales in the first half financial year to January 2021 due to a worsening economic environment characterized by hyperinflation and low disposable incomes.
Units sold in the half year were 23.3 percent down on the prior year and this was the trend from July to December on a month by month basis compared to the similar months last year.
Due to hyper-inflationary conditions, Truworths chief executive officer Bekithemba Ndebele said, “The business curtailed the granting of credit. In the half year cash sales were 66.9 percent of total sales and credit sales were 33.1 percent of total sales.”
The doubtful debt provision was 15.2 percent of gross debtors compared to 12.6 percent in the prior periods.
Worse still, operational costs increased and matters were compounded by the impact of COVID-19 pandemic lockdown which immensely affected business.
Trading expenses increased by 21.7 percent in hyperinflation terms.
“There were price increases in main key expenditure lines such as Occupancy Costs, Employment Costs and Other Operating Costs,” said Ndebele.
“Overall the half year was negatively affected by the Covid-19 business restrictions in particular the period July to September. The most negatively impacted area on trading volumes in the half year under review was Harare CBD which happens to have our biggest stores,” he said.
The board did not declare a dividend due to the need to finance increased working capital requirements in a hyperinflationary environment with limited supplier credit terms.