CLOTHING retailer Truworths Limited says sales and profitability continue to be adversely affected by the restrictive pricing laws, which give an unfair advantage to the informal sector.
Formal retailers are required by law to use the 10% trading margin above the interbank rate.
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 cheaply imported materials and second-hand clothes dominating the market.
Ndebele recently told our sister newspaper NewsDay that the company could no longer keep open shops that were underperforming and less productive owing to the challenges the textile industry faces.
“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 on the 9th are in Mutare, Masvingo, Bindura, and Mt Darwin ... and the reason behind it is because of the business dynamics in this country.
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“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 loss and this is also caused by the economy of this country.”
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.
Since Truworths started to face challenges from cheap imported material, second-hand clothing, and foreign currency pricing distortions, to date, the firm now has six Truworths Ladies outlets, Truworths Men (six), Topics (14), and Number 1 (12). 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 was welcome.
In the period under review, the unit sales out-turn was 5,8%, an increase from -21,1% experienced 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,” Ndebele added.”
“Of the cash sales, 71,4% were in US dollars and 28,6% in Zimbabwe dollars.”
