JOHANNESBURG (Reuters) -South African fashion retailer Truworths on Thursday reported a 6.3% decline in full-year profit, citing a drop in discretionary spending by customers squeezed by high interest rates.
The upmarket retailer said headline earnings per share for the year to June 30 fell to 817.9 cents from 873.3 cents a year earlier.
Its shares were down 1.16% at 92.87 rand at 1332 GMT.
The company, which also has operations in Britain, Ireland and other sub-Saharan African countries, reported a 3.6% rise in group retail sales to 21.4 billion rand, bolstered by its UK operations.
Middle-income consumers in South Africa are increasingly turning to credit to fund non-essential goods such as clothes, shoes and household items due to pressure on disposable incomes.
However, Truworths also reported a decline in credit sales, which account for 70% of its African business’ retail sales.
“Higher interest rates have resulted in consumer debt servicing costs increasing, leading to higher levels of default across the credit market,” the company, whose brands include Daniel Hechter, Uzzi and Naartjie, said in a statement.
South Africa’s central bank is expected to cut interest rates on Sept. 19 following an extended period of tight monetary policy after consumer inflation slowed to 4.6% year on year in July, a three-year low.
Truworths declared an annual dividend of 529 cents per share, down 6.4% from a year earlier.
(Reporting by Sfundo ParakozovEditing by David Goodman and Mark Potter)
