Truworths Appoints Garbino of Kiabi as CEO as Shares SlumpJanice Kew and Mike Cohen
Truworths International Ltd. named Jean-Christophe Garbino of Kiabi Europe SAS as chief executive officer as the South African retailer’s shares fell the most in six years amid a weak trading and credit environment.
Garbino, 45, will become CEO designate in March, after leading closely held Kiabi since 2007, Cape Town-based Truworths said in a statement today. He will take over from Michael Mark, who ends his 23-year stint at the helm of the company when his contract expires in June.
“Its been a really tough period,” Mark said after the company’s annual general meeting in Cape Town today. “We think our exposure in the credit environment is making us particularly vulnerable at the moment. We really feel we are taking more pain and more strain.”
South African retailers have been struggling this year as rising inflation and unemployment of more than 25 percent hurts consumer spending. Truworths generates most of its sales on credit, which has been in short supply as customers battle to pay back loans. Unsecured loan-provider African Bank Investments Ltd. collapsed in August.
Truworths sales for the 18 weeks ending Nov. 2 increased by 4.7 percent to 3.7 billion rand ($332 million), the company said in a separate statement. The shares slumped as much as 10 percent, the biggest decline for six years, and traded 7.4 percent lower at 69 rand at the close of trading in Johannesburg. The FTSE/JSE General Retailers Index declined 2.8 percent.
“I think it’s more the update numbers that caused the fall,” Alec Abraham, an analyst at Sasfin Wealth in Johannesburg, said by e-mail. “I was expecting about 6 percent revenue growth, so 4.7 percent missed.”
The Foschini Group Ltd., which competes with Truworths, had sales growth of 9.7 percent in the six months through September, the Cape Town-based company said in a statement today. Its shares pared declines to trade 2.8 percent lower at 120.50 rand.
Garbino more than doubled the number of Kiabi outlets to 450 and led an expansion into eight European countries, Truworths said. He joins a growing list of foreign CEOs of South African retailers that includes Britons Ian Moir at Woolworths Holdings Ltd. and Richard Brasher at Pick n Pay Stores Ltd.
“He understands American retail, he understands European retail,” Mark, 61, said. “He just brings to this business something different which could well take it from where it is to new heights.”
Truworths will slow its expansion plans this year in response to the weak trading environment, adding about 7 percent more floor space in the year ending June 2015 and another 5 percent in the 12 months after that, Mark said. He expects trading conditions to improve slightly in 2015 although “not materially.”
The company said last month it agreed to buy high-end South African chain Earthchild Clothing (Pty) Ltd. for an undisclosed cash sum to boost its offering to children.