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Enacy Mapakame, Harare Bureau
LISTED clothing retailer, Truworths Zimbabwe’s earnings for the year to July 2020, took a dip due to Covid-19 induced restrictions to trade.

During the second half of the year under review the country was in a lockdown, which started in March as part of efforts to curb the spread of the pandemic. For Truworths, its stores were closed the entire month of April and the first two weeks in May in compliance with lockdown restrictions.

As a result, units sold went down 59,9 percent on an overall basis and 57,5 percent on a like for like basis.

“The second half period was negatively affected by the Covid-19 lockdown,” said chief executive officer Br Bhekithemba Ndebele in a statement accompanying the financial results.

Despite the movement restrictions effected, the debtors’ collection teams worked virtually and the collections for the months of April and May were acceptable, according to Mr Ndebele. The period was also characterised by high inflation, reduced disposable incomes and foreign currency shortages, which had a knock-on effect on product availability.

The foreign currency situation has, however, improved since the introduction of the Foreign Exchange Auction by the Reserve Bank of Zimbabwe (RBZ). During the year under review, revenue went down seven percent to $165 million from $177 million recorded in the prior year. Operating profit came in at $17 million, which was 56 percent below prior year’s $39 million.

Profit for the period took a 60 percent dip to $9 million compared to $23 million recorded during the same comparable period. Basic and diluted earnings per share came in at 2,46 cents from 6,15 cents. Gross profit margins held firm at 64 percent with no merchandise markdowns.

Total assets went down 26 percent to $157 million from $213 million in the prior year.

During the paid under review, active accounts decreased by 0,5 percent as the hyper-inflationary conditions forced the business to conservatively and judiciously manage the granting of credit.

The tenure of the credit period was also reduced and monthly interest charges were reviewed upwards.

Mr Ndebele said the doubtful debt provision as a percentage of gross debtors was 13,5 percent compared to 15,2 percent in the prior period. Although lockdown restrictions have eased with the environment slowly returning to normal, the business environment is expected to remain constrained due to waning disposable incomes as well as Zimbabwe dollar liquidity shortages. The adverse impact of Covid-19 is also going to pose challenges for businesses across sectors due to international supply chain disruptions.

Said Mr Ndebele: “Since the easing of the lockdown restrictions, trading has been in line with our expectations in the current environment except for Harare CBD stores.”

Truworths did not declare a dividend due to the need to finance increased working capital requirements in a hyperinflationary environment with limited or reduced supplier credit terms.