Avior Capital Markets - Truworths International Limited (10HL) Truworths | Give Credit to fashion

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Avior Capital Markets

Atiyyah Vawda ...

Jiten Bechoo

Truworths | Give Credit to fashion

Truworths (JSE: TRU) results show that poor revenue growth profile is eroding operating margins and returns despite effective inventory and cost control. We believe that this is a result of Truworths' (womenswear) premium pricing, and a lack of innovation and fashion appeal in the product offer and will result in further market share loss. This will dilute TRU returns and earnings growth profile. TRU's ROIC decreased from its historic average of 36.8% (since â€˜08) to 21.1% in H1'19.

In this report we measure the impact of overreliance on credit on revenue growth and we analyse the impact of IFRS 9 adoption on margins.

08/03/2019 13 EN

Underlying

Truworths International Limited

Truworths International is an investment holding company. Co. is engaged in management. Through its subsidiaries, Co. is engaged, either directly or through franchises and agencies, in the retailing of fashion apparel and related merchandise. Co.'s brands include: Outback Red, Truworths Casualwear, Truworths Jeans, Ginger Mary, Finnigans, Truworths Collection, Essence, Truworths Glamour, Zeta, Intrigue, Skiny, Peep, Lucia Rosati and Truworths Maternity. Co. principally operates in southern Africa.

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ZAE000028296 Johannesburg Stock Exchange South Africa

Provider

Avior Capital Markets

Avior is a globally recognised capital markets research and trading firm, with the broadest research coverage within the region, with 100+ SA and 20+ SSA companies under coverage. Avior services clients from offices in London, Cape Town and Johannesburg.

Our research quality is consistently recognised in local and global surveys, with 18 analysts currently rated in their respective sectors (FM 2017). Value add through in-depth, innovative, high quality and consistent research with comprehensive underlying fundamental modelling supported by regular analyst and roadshow interactions.

Avior has proven that by working closely with our clients we can mutually develop dominant positions in certain sectors, going from strength to strength. Avior has a dedicated ESG team, having been ranked #1 in Corporate Governance research since 2008.

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Analysts

Atiyyah Vawda

Jiten Bechoo

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