South Africa's Truworths warns on profit, UK footwear options open

South African retailer Truworths said on Monday that its full-year profit was likely to fall by at least 30% and it was unlikely to pay a dividend, while all options were open for its British footwear business.

Truworths, which sells clothes, shoes and jewellery, has been grappling with tough conditions in both Britain and South Africa, where the economy tipped into recession at the end of 2019, before the coronavirus hit.

It said in a trading update that the coronavirus crisis had dealt a further blow, with headline earnings per share (HEPS), the main profit measure in South Africa, likely to fall by at least 30% this year.

“The board further advises that, having regard for the group’s currently projected financial performance and position in the short to medium term, it is unlikely that a final dividend for the period will be declared,” Truworths said.

It added that it had extended the term of its borrowing facilities and was taking measures to mitigate the impact of the pandemic by curbing expenditure and preserving cash.

All options, including restructuring, were being considered for British footwear chain Office, which has been struggling with poor consumer demand and Brexit uncertainty.

Sky News reported in April that Office was up for sale.

Truworths said it would have to take an impairment related to the unit, but it could not quantify this at present.

The company said would provide an anticipated range for the fall in HEPS when it has reasonable certainty, although this would likely fall by at least 174 cents per share, versus 580 cents reported a year earlier.

Shares in Truworths closed 2.73% lower, before the trading statement was published.