Truworths profits rise, but flags bad debts
South African retailer Truworths reported a 19 percent rise in half-year profit on Wednesday.
JOHANNESBURG - South African retailer Truworths reported a 19 percent rise in half-year profit on Wednesday, driven by a credit-fuelled consumer spending spree that the company warned would not last.
"The credit environment is expected to deteriorate further in the months ahead owing to increasing levels of consumer indebtedness," Truworths said in a statement.
After more than two years as investors' darlings, South African retailers are falling out favour because of doubts over the debt-led consumer spending boom in Africa's biggest economy.
Truworths, which raised its dividend by 21 percent to 204 cents per share, said it had written-off 9.3 percent more customer debts during the period compared with 8 percent a year earlier.
Truworths shares are off about 10 percent year-to-date and were down 2.22 percent at 98.54 rand by 1328 GMT.
The retailer, which sells more than 70 percent of its apparel on credit, said diluted headline earnings per share totalled 324.8 cents in the six months to end-December compared with 272.3 cents a year earlier.
Headline EPS, the primary profit gauge in South Africa, excludes certain one-off and non-trading gains or losses.
Sales rose nearly 15 percent to 5.5 billion rand ($620 million) helped partly by new stores. Same-store sales were 9.8 percent higher.