Truworths reduces credit sales
Listed clothing retailer, Truworths, says it is reducing exposure to credit sales as it seeks to cushion the business from the obtaining inflationary pressures.
Company secretary, Brenda Chibanda, revealed the group would increase its focus on cash sales as a way to manage risk of loss of value, at a time the rate of inflation is rising due to exchange rate volatility on the parallel market, fuelled by unscrupulous individuals seeking arbitrage opportunities.
During the third quarter to April 10, 2022, cash sales accounted for 65,2 percent versus 64,8 percent credit sales.
“Credit granting is continuously being reviewed taking into consideration developments in month on month inflation and the need to manage the risk of loss of value on the debtors’ book.
“The resurgence of inflationary pressures necessitates that the business reduces its exposure on credit sales and focuses on cash sales,” she said.
Consumer oriented businesses across sectors have also expressed concern over the rising inflation which has eroded consumer spending, posing a challenge to demand for goods and services.
This is coupled with other global shocks such as the conflict in Ukraine which has resulted in supply chain disruptions and a spate of price increases.
In line with this, businesses across sectors are also coming up with strategies to survive under economic uncertainties, such as cost cutting measures. For Truworths, the business will be skewed towards cash sales.
“The regulatory environment and the deteriorating economic environment will continue to be a hindrance to normal trading. The “managed exchange rate” for local US dollar sales will have a negative impact on financial performance.
“The lag in consumer income growth relative to increased inflationary pressures will reduce consumer disposable income. The Business will focus on improving cash sales and productively controlling costs,” she said.
Units growth for the period came in at 61,5 percent. During the third quarter prior period, the business traded for 5 weeks only compared to 13 weeks in the third quarter this year due to lockdowns implemented last year.
“The figures for the 3rd quarter this year are not comparable to the prior period due to the lockdown in the prior period,” said Chibanda.
Businesses not classified as essential services lost nearly two months of trading as the country implemented lockdown measures to limit the spread of the Covid 19 pandemic.
By the close of Thursday trading session on the Zimbabwe Stock Exchange, Truworths
shares were pegged at $2,40.-eBusiness Weekly
