- Huw Hughes
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South Africa’s Truworths International Ltd is planning to close up to 15
loss-making Office stores in the UK as part of its turnaround strategy.
The day after the company released its full-year results, CEO Michael
Mark told analysts plans to close up to 15 of its roughly 139 stores over
the next two years, as well as three “problematic” concessions. He also
said there was the possibility of closing more.
Truworths said in its 2019 annual results presentation: “Closure of poor
performing stores remains a priority, while enhancing the e-commerce
offering to grow sales in a consumer environment trending towards online
shopping – footwear is highly conducive to online retailing.”
The company cited Brexit uncertainty as a particular issue, with grading
conditions and consumer confidence remaining under “intense pressure” ahead
of the en-October Brexit deadline.
However, in its 2019 annual results presentation, Truworths said “given
current levels of profitability, cash generation, solvency and liquidity,
no major business restructuring is appropriate.”
Office entered into debt restructuring negotiations with lenders in June
2019, with
Office and lenders appointing advisors Alvarez & Marsal (A&M) and
Deloitte.
In the year to 30 June, Office had an operating loss of 94.7 million
pounds, affected by an impairment charge of 97 million pounds. Retail sales
were up just 1 percent to 279 million pounds while online sales jumped 10
percent.
An amount of around 42.5 million pounds is owed to UK lenders, and
Office has cash balances currently of around 28-32 million pounds (net debt
levels are currently around 10-15 million).
The news comes a week after Mike Ashley’s Sports Direct announced it had
closed eight Jack Wills stores in a similar move to streamline its business
amid difficult trading conditions.
Photo credit: Office Shoes, Facebook
