Truworths gets three-month reprieve
THE Zimbabwe Stock Exchange (ZSE) has granted Truworths a three-month voluntary trading halt to provide the consumer discretionary concern an opportunity to address the going concern aspects of the business.
In a statement on Monday, ZSE chief executive officer Justin Bgoni said the suspension was effective from March 7, 2024.
“The suspension is for a period of three months to provide Truworths with the opportunity to address the going concern aspects of the business and ensure compliance with ZSE listing requirements regarding the publication of audited financial statements for the period ending 9th July 2023,” he said.
“This temporary suspension aims to give Truworths the necessary time to rectify any concerns and meet the regulatory obligations stipulated by the ZSE. At Truworths’s request, the ZSE sought and was granted permission to suspend trading in its shares by the Securities and Exchange Commission of Zimbabwe pursuant to the provisions of Section 64 (1) (a) (ii) of the Securities and Exchange Act [Chapter 24:25].”
In terms of Section 9 of the ZSE listings requirements, the company should continue to discharge its obligations to the shareholders and the ZSE during the suspension, the bourse said.
Bgoni said the ZSE has requested Truworths to provide a roadmap on how it will resolve the challenges.
“Truworths Limited will issue a public notice addressing this point in due course. Investors will not be able to buy or sell Truworths shares during the suspension period,” he said.
In a trading update for the six months ended January 7, 2024, Truworths chief executive officer Bekithemba Ndebele said the operating environment remained complex and uncertain.
“Sales and profitability continue to be adversely affected by the restrictive pricing laws, which give an unfair advantage to the informal sector, and the importation of substandard clothing and footwear by the informal sector which sells at below production cost and duties payable,” he said.
Truworths recently closed six stores with the closures linked to the influx of cheap imported secondhand clothes that are dominating the market.
Ndebele recently disclosed that the company could no longer keep underperforming and less productive shops open owing to the challenges bedevilling the textile sector.
“On the issue of closing, there are shops that were underperforming and we closed those as they were not productive,” he said.
“The stores that we closed are in Mutare, Masvingo, Bindura and Mt Darwin … and the reason behind it is because of the business dynamics in this country,” Ndebele said.
“Underperformance contributes to the closure of the store as one will not be able to pay rentals for that shop meaning that we need to scale down and avoid losses.”
Of the six closed shops, three are Topics shops in Bindura, Mutare and Masvingo, two Number 1 outlets in Mutare and Mt Darwin and one Truworths Ladies in Masvingo.
Truworths now has 38 stores from a peak of over 50.
Ndebele, however, said the recent announcement regarding the continued use of the multi-currency regime until 2030 is welcome.
In the period under review, the unit sales out-turn was 5,8% an increase from -21,1% experienced in the same period in the prior year. Cash sales were 60,7% of the overall sales and the remaining 39,3% were credit sales.
“All credit sales were in US dollars and the growth in the credit sales is being hampered by a lack of US dollar long-term finance. Of the cash sales, 71,4% were in US dollars and 28,6% in Zimbabwe dollars,” he said.
https://www.newsday.co.zw/business/article/200024266/truworths-gets-three-month-reprieve