Truworths International Limited, a well-known retailer based in South Africa, is currently in the midst of negotiations to secure funding for its British footwear business, Office. The company is taking various measures to ensure the long-term viability of Office, which includes negotiating funds, implementing redundancies, and renegotiating store leases. These actions are being taken as a result of the challenging circumstances brought on by the Covid-19 pandemic and the subsequent closures of stores.

The impact of the pandemic has been significant not just for Truworths’ Office business, but for the company as a whole. The closures of clothing, jewelry, homeware, and footwear stores have caused a decrease in revenue, reduced collections, and an increase in doubtful debts for Truworths Africa’s debtors’ book. Doubtful debts refer to amounts that are less likely to be collected from customers who have made credit purchases.

Office, in particular, has been faced with additional challenges in recent years. Truworths acquired the majority stake in Office in 2015, but the uncertainties surrounding the UK’s departure from the European Union and the collapse of the department store House of Fraser have had a significant impact on the business. Chief Executive Michael Mark has already announced plans to close approximately 15 of Office’s 139 stores over the next two years, with the possibility of more closures in the future. In addition, three concessions will also be closed.

In May, Truworths revealed that it would need to take an impairment related to Office, although the specific value of the impairment was not disclosed. Retail sales for Truworths as a whole have experienced a decline of 9.4% to 16.9 billion rand (£809.8 million) in the 52-week period ending June 28. This decline can largely be attributed to the lockdown measures implemented in South Africa and the UK. Office’s retail sales have fallen by 11.3% in local currency. Truworths Africa, encompassing popular brands such as EARTHCHILD kids clothing and Identity clothes store, has seen a decrease in sales of 8.7%, with credit and cash sales dropping by 8.4% and 9.5%, respectively.

Overall, Truworths International Limited is facing significant challenges in securing funding and ensuring the survival of its British footwear business, Office. The negative impacts of the Covid-19 pandemic, in addition to other factors such as Brexit uncertainties and the collapse of major department stores, have greatly affected the company’s operations. It remains crucial for Truworths to continue taking necessary measures to adapt and navigate through these challenging times.

Useful links:
1. Truworths International Limited Official Website
2. Truworths International Limited Investor Centre