Truworths Sees Lower Credit Sales as Customers Miss Payments
Truworths International Ltd., South Africa’s biggest clothing retailer by market value, predicted more credit customers will miss payments even as it reported first-half profit that advanced 20 percent.
Net income climbed to 1.4 billion rand ($158 million) in the six months through December, compared with 1.2 billion rand a year earlier, the Cape Town-based owner of brands such as Uzzi and Daniel Hechter said in a statement. Sales rose 15 percent to 5.9 billion rand.
“The quantum of unsecured lending has led to escalating levels of debt,” Chief Executive Officer Michael Mark said in a telephone interview. “We may go into a credit contraction.” Mark said he “hopes” for a second-half performance in line with the first half.
Truworths’ shares declined as much as 2.9 percent, the most in more than a week, and closed down 1 percent at 99.80 rand in Johannesburg, the lowest since Jan. 30. The stock is on a seven- day falling streak, the longest since Nov. 1, according to data compiled by Bloomberg.
The comments on the credit environment are “likely to be of concern to the market,” Jeanine Womersley, an analyst at Renaissance Capital, said in an e-mailed statement today. “A lot of the benefit of the company’s strong top line growth has been mitigated by the 40 percent increase in debtors costs over the 26 week period.”
Shoprite Holdings Ltd., Africa’s largest retailer, said yesterday that rising costs for households and labor unrest would continue to damp consumer spending in the first half of 2013. It said December sales rose 12 percent, compared with 17 percent in the same month a year ago.
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