LISTED clothing retailer Truworths says it is reducing exposure to credit sales as it seeks to protect the business from inflationary pressures.
Corporate Secretary Brenda Chibanda has revealed that the group will place greater emphasis on cash sales as a means of managing the risk of loss of value at a time when the inflation rate is rising due to volatility in interest rates. exchange on the parallel market fed by unscrupulous individuals looking for arbitrage opportunities.
During the third quarter to April 10, 2022, cash sales represented 65.2% compared to 64.8% for credit sales.
“The granting of credit is continually reviewed taking into account the evolution of inflation from one month to the next and the need to manage the risk of loss of value on the accounts receivable book.
“The resurgence of inflationary pressures requires the company to reduce its exposure to credit sales and focus on cash sales,” she said.
Consumer-focused companies across all sectors have also expressed concern over rising inflation, which has eroded consumer spending, posing a challenge to demand for goods and services.
This is on top of other global shocks such as the conflict in Ukraine, which has led to supply chain disruptions and a wave of price hikes.
With this in mind, companies from all sectors are also proposing strategies to survive in economic uncertainties such as cost reduction measures.
For Truworths, the business will be geared towards cash sales.
“The regulatory environment and the deterioration of the economic environment will continue to be an obstacle to normal trade.
The “administered exchange rate” for local US dollar sales will have a negative impact on financial performance.
“The lag in consumer income growth relative to rising inflationary pressures will reduce consumer disposable income.
The business will focus on improving cash sales and productive cost control,” Chibanda said.
Unit growth for the period was 61.5%.
In the previous third quarter period, activity only traded for five weeks, compared to 13 weeks in the third quarter of this year due to the containment measures put in place last year.