JOHANNESBURG, Sept 12 (Askume) – South African fashion retailer Truworths (TRUJ.J) on Thursday reported full-year profit fell 6.3% as rising interest rates reduced discretionary spending by customers.
The upmarket retailer said core profit per share in the year ended June 30 fell to 817.9 cents from 873.3 cents a year earlier.
Its shares were down 1.16% at R92.87 by 1332 GMT.
The company, which also operates in the UK, Ireland and other sub-Saharan African countries, reported group retail sales grew 3.6% to R21.4 billion, led by the UK business.
As disposable incomes come under pressure, South Africa’s middle-income consumers are increasingly turning to credit to buy non-essential items such as clothing, footwear and household goods.
However, Truworths also reported a decline in credit sales, which account for 70% of retail sales in its African operations.
The company, whose brands include Daniel Hechter, Uzi and Naartzi, said in a statement, “Rising interest rates have increased the cost of servicing consumer loans, resulting in higher rates in the lending market.”
The South African Reserve Bank may cut interest rates on September 19 after a long period of tightening monetary policy, after consumer inflation fell to a three-year low of 4.6% in July .
Truworths declared an annual dividend of 529 cents per share, down 6.4% from the same period last year.
