Truworths sees 28.2% decline in headline earnings due to COVID-19
Another retailer hit by the COVID-19 pandemic is Truworths, reporting a 28.2 per cent decrease in headline earnings. The company reduced its annual dividend per share by 27 per cent, to 280 cents. Truworths CEO, Michael Mark joins CNBC Africa for more.
Thu, 03 Sep 2020 16:19:15 GMT
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AI Generated Summary
- Truworths reports a 28.2 percent decline in headline earnings, reflecting the challenges brought about by the COVID-19 pandemic.
- The company emphasizes the growth of e-commerce as a key strategy for future success in response to changing consumer behavior.
- The uncertainty surrounding Brexit and the ongoing COVID-19 crisis pose additional challenges for Truworths' operations, particularly in the UK market.
Truworths, like many other retailers, is feeling the impact of the COVID-19 pandemic, with a significant decline in headline earnings. The company's annual dividend per share has decreased by 27 percent, reflecting the challenges faced in the current economic climate. In a recent interview with CNBC Africa, Truworths CEO Michael Mark shed light on the company's financial performance and shared insights into their strategies moving forward.
During the interview, Mark addressed the delay in releasing the financial numbers, citing a lengthy board meeting as the reason. Despite the delayed release, the numbers painted a clear picture of the challenges Truworths is facing, particularly in terms of sales and footfall in stores. Mark acknowledged the decrease in consumer activity, especially in major shopping malls where footfall remains low due to ongoing concerns surrounding the pandemic. However, he reassured that the company has managed its stock levels efficiently, avoiding overstocking and maintaining a healthy gross margin.
In response to the changing consumer behavior and the shift towards online shopping, Mark emphasized the importance of e-commerce for Truworths' future growth. He noted a significant increase in e-commerce sales during the crisis period, with a growth rate of 160 percent. While e-commerce currently accounts for about 3 percent of Truworths' sales, Mark sees it as a vital component of the business going forward, projecting further growth in the coming months.
When discussing the impact of Brexit on Truworths' UK operations, Mark highlighted the challenges posed by the uncertainty surrounding the UK's exit from the Eurozone. He noted that Brexit has already been causing economic slowdown in the region, and the added complication of COVID-19 has further exacerbated the situation. The decline in tourism in London has significantly impacted Truworths' stores in the city, despite the growth of e-commerce in the UK market.
Looking ahead, Mark expressed optimism about the future, anticipating improvements once a vaccine for COVID-19 becomes available in early 2021. While Brexit will continue to be a factor, Mark believes that resolving the current health crisis is essential for the recovery of both the UK economy and Truworths' operations in the region.
Overall, Truworths faces significant challenges in the current economic landscape, but the company remains resilient in adapting to changing consumer behavior and market conditions. With a focus on e-commerce and cautious optimism for the future, Truworths continues to navigate the uncertainties brought about by the pandemic and other external factors.