The coronavirus pandemic is likely to have hit Truworths hard, the retailer has warned, with its full-year earnings facing a possible drop of some 30% and the payment of a dividend unlikely.
In a trading statement issued after markets closed on Tuesday, Truworths said the requirement to close all store premises in all its countries of operation during lockdown periods – some of which remain in force – had had a "significant impact" on its businesses.
Both its UK-based shoe chain, Office, and the Truworths business, namely the fashion retailer in South Africa, have been impacted.
Management has been working actively to mitigate the damage, the retailer said, with priorities being to cut spending and preserve cash. Truworths has also extended the term of its borrowing facilities, according to the statement, in a bid to boost liquidity in the medium term.
But Office in particular had already been contending with negative consumer sentiment and Brexit-related uncertainty, Truworths said. Restructuring is a possibility for the shoe retailer, but management is "considering all possibilities" and engaging with advisors.
The group said it would have to take an impairment relating to Office as a result, but the details were still uncertain. However, impairments of the Office trademarks and right-of-use assets could mean the group records a decline, or possibly a loss, in earnings per share, compared to the previous year.
The group is expecting headline earnings per share (HEPS) to drop by around 30%, or 174 cents, for the period.
"Given the current uncertainties in quantifying the impairments, it is not possible to provide an indication of the percentage decline in EPS with reasonable certainty at this stage," the retailer said, adding that the board will provide further details at a later stage.
Shares in Truworths [TRU] closed 2.73% lower at R29.93.
Compiled by Marelise van der Merwe