Truworths reduces exposure to credit sales Truworths

Harare Bureau
LISTED clothing retailer, Truworths, says it is reducing exposure to credit sales as it seeks to cushion the business from obtaining inflationary pressures.

Credit sales

Company secretary, Brenda Chibanda, revealed the group will increase its focus on cash sales as a way to manage the 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 for 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.

Conflict in Ukraine

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.

US dollar

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,” said Chibanda.

Units growth for the period came in at 61,5 percent.

During the third quarter prior period, the business traded for five weeks only compared to 13 weeks in the third quarter this year due to lockdowns implemented last year.

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