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Sep 4, 2020
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Office gets funding from parent firm Truworths, will close stores

By
Reuters
Published
Sep 4, 2020

South African retailer Truworths International is to advance funding of £6.5 million ($8.62 million) to its British footwear unit Office as part of a rescue plan.


Office



The Truworths group as a whole, which sells clothes, jewellery and homewares, as well as shoes, has been hit by the impact of the Covid-19 pandemic and store closures because of lockdowns.

On Thursday, it said its headline earnings per share, South Africa’s most closely-watched profit figure, fell by 28.2% in the year to June 28.

The pandemic impact forced Truworths to consider restructuring plans for Office that include redundancies and renegotiating store leases.

It said the fresh funding will be taken from existing group cash reserves in a phased manner over the next 15 months and will take the form of a secured revolving credit facility to Office Holdings Ltd.
“The store portfolio remains a key focus point and management continues to engage with landlords on lease negotiations. Loss-making and marginal stores will be closed as leases come to an end,” Truworths said referring to Office.

The group’s retail sales fell by 9.2% to ZAR16.9 billion ($1.01 billion) after Truworths was unable to trade from stores or online in South Africa for five weeks, while debt collection from shoppers who buy on credit fell significantly.

Credit sales of the Truworths Africa business comprise 70% of retail sales in that unit.

In the UK, the company was allowed to continue selling products online but the 8.8% growth in online sales was not enough to prevent a 16.4% decline in sales there.

Impairments totalling $165.28 million swung the company to a trading loss of ZAR1.3 billion from a profit of ZAR 459 million.

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