Truworths focuses on cost rationalisation

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CLOTHING retailer, Truworths says it will focus on productive cost rationalisation and working capital management as its volumes are currently under threat owing to the suspension of the local currency and limited US dollar credit.
The company suspended its ZW$ credit sales on 1 July 2022 due to high interest rates which were hiked by the fiscal authorities to 200 percent as a measure to tame inflation.
“The environment remains uncertain in particular the sustainability of the regulated rate of 200% and tight ZWL liquidity. US Dollar credit is considered on a selective basis where there is assurance that the US$ earnings are guaranteed,” Truworths chief executive Bekithemba Ndebele said in a statement accompanying the results for the year ended 10 July 2022.

“With the suspension of ZWL credit and limited USD credit, volumes will inevitably come down and there will have to be a focus on productive cost rationalisation and working capital management.”
This comes as the International Monetary Fund late last year urged Zimbabwe to maintain a tight monetary policy and lift forex controls to keep inflation on its current path and prevent money supply growth.
“Currency and price pressures, which emerged earlier this year largely owing to a spike in broad money growth and an official exchange rate misaligned with market fundamentals, are subsiding,” the IMF said.
The IMF, however, warned that renewed domestic and external shocks were adversely affecting economic and social conditions.
Ndebele highlighted that high unemployment levels and low disposable incomes due to inflation had an impact on the volumes sold during the year as customers resorted to buying products in the unregulated informal market at prices which the business could not compete against.
“Sales and profitability were adversely affected by the restrictive pricing laws which rendered products expensive in US Dollar terms and relatively cheap in Zimbabwe Dollar terms,” he said.
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