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Fashion retailer Truworths operating profit up 27%
Jul '08
Truworths International Ltd released the financial results for 2008. In a challenging trading environment over 27 weeks, group sale of merchandise increased to R3 018 million (R2 901 million excluding week 27). This was 20% more than in the prior period(15% excluding week 27).

- Merchandise sales up 20%
- Operating profit up 27%
- Headline earnings per share up 26%
- Interim dividend up 20%
- Group results

The buoyant retail trading conditions of recent years slowed during the period as a result of the seven interest rate increases totalling 350 basis points over the last 18 months and a general rise in the cost of living most evidently reflected by food price inflation and an increasing fuel price. The introduction of the National Credit Act in June 2007 served to slow new credit extension and credit line increases, dampening consumer demand.

Based on a corporate tax rate of 29%, headline and basic earnings per share of 159.9 cents(149.8 cents excluding week 27) equate to a 26% increase (18% excluding week 27) compared to the prior period's 126.5 cents; this is in line with indications in the Group's trading statement on SENS on 18 January 2008. An interim cash dividend of 72 cents a share has been declared, 20% more than that declared in respect of the prior period.

Sales growth included comparable store sales growth of 11% (7% excluding week 27), with product inflation of approximately 6%. Trading space increased by 11% relative to the position at 24 December 2006 through the opening of 21 Truworths, 20 Identity, two YDE and nine Uzzi stores and the closure of four Truworths stores.

Group retail sales of merchandise for the first seven weeks of the second half of the current financial period reflect growth of 16% on the prior comparable period. The retail environment is likely to be a tough one over the forthcoming months.

Nonetheless, management anticipates that trading activity in the period to June 2008 is likely to yield satisfactory real earnings growth, as the Group has consistently achieved for many years, albeit at a lower level than was achieved in the 2007 period.

Truworths is a leading fashion retailer operating two-hundred-and-fifty-seven stores in South Africa.

Truworths International Ltd

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