Jul 16, 2020
Truworths negotiates funding for UK footwear retailer Office
Jul 16, 2020
Truworths International Limited is negotiating fresh funding for Office, its British footwear business as part of measures to secure the unit's viability, the South African retailer said on Wednesday.
The group as a whole, which sells clothes, jewellery and homeware, as well as shoes, has been hit by the impact of the Covid-19 pandemic and store closures because of lockdowns.
"The economic crisis caused by the severe negative impact of the ongoing Covid-19 pandemic has resulted in diminished revenue, reduced collections and an increase in the doubtful debt provision in respect of the Truworths Africa debtors' book," the group said in a statement.
Doubtful debts are those which a business or individual is unlikely to be able to collect from shoppers who buy on credit.
To secure Office's "long-term viability," the group said it was negotiating funds as well as implementing redundancies and renegotiating store leases.
Problems in Office, in which Truworths bought a majority stake in 2015, have been compounded by uncertainty over Britain's departure from the European Union and by the collapse of department store House of Fraser, where Office had several concessions.
In August, Chief Executive Michael Mark told analysts the company expects to close up to 15 of Office's roughly 139 stores in the next two years, with possibly more to follow, and also close three concessions.
In May, Truworths said it would have to take an impairment related to Office, but declined to quantify the value.
Truworths on Wednesday said group retail sales declined by 9.4% to 16.9 billion rand (£809.8 million) in the 52-weeks ended June 28 because of lockdowns in South Africa and Britain.
Retail sales for Office fell by 11.3% in local currency, it said.
Sales for Truworths Africa business, which includes EARTHCHILD kids clothing chain and Identity clothes store, decreased by 8.7%, with credit and cash sales falling by 8.4% and 9.5%, respectively.
© Thomson Reuters 2021 All rights reserved.