Clothing giant, Truworths says it’s cautiously reviewing credit granting to its clients and prioritize improving cash sales amid rising cost of living to minimize risk of loss of value on its debtor’s book.
The year-on-year inflation rate (annual percentage change) for the month of May stood at 131.7 percent in what continues to erode consumer power aided by the rapid devaluation of the local currency.
In its third quarter trading update, group sale however remained largely in cash as compared to credit.
“Credit granting is continuously being reviewed taking into consideration developments in month on month inflation and the need to manage the risk of loss of value on the Debtors book,” said the company.
During the quarter, credit sales remained competitive, constituting 34.8 percent of total sales as compared to 65.2 percent which were in instant cash.
“The “managed exchange rate” for local US dollar sales will have a negative impact on financial performance. The resurgence of inflationary pressures necessitates that the business reduces its exposure on Credit sales and focuses on Cash sales,” added the group.
The group also said the lag in consumer income growth relative to increased inflationary pressures will reduce consumer disposable income hence the business will focus on improving cash sales and productively controlling costs.
