Truworths International Ltd., South Africa’s third-largest clothing retailer by market value, fell to the lowest in four months as sales growth slowed amid rising inflation and unemployment.
Revenue for the 52 weeks through June 29 rose 6.8% to R10.8 billion, compared with an 11% increase in the same period a year earlier, the Cape Town-based company said on Friday in a statement. Credit sales, or purchases funded by loans from the company, rose 5%, compared with growth of 9% in fiscal 2013.
“There’s been a bigger rejection rate on credit granting at the same time as Truworths is losing sales to international retailers and there is general pressure on South African consumers,” Alec Abraham, an analyst at Sasfin Securities in Johannesburg, said by phone.
South Africa’s consumers have been struggling in Africa’s second-biggest economy due to unemployment of more than 25% and inflation that has increased to 6.6%. The South African Reserve Bank yesterday raised its benchmark interest rate by a quarter of a percentage point, increasing the pressure on borrowers and mortgage holders.
The shares slid 3.6% to R72 by the close in Johannesburg, the lowest since March 20. The stock has declined 6.2% this year, compared with an 8.9% increase on the ten-company FTSE/JSE Africa General Retailers Index.