Truworths International Ltd
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For this edition, we cover the following stocks:
Truworths International Ltd
Interim results for 26 weeks ending 29 December 2013 expected 20 February 2014
Truworths International Ltd. is an investment holding and management company listed on the JSE and the Namibian Stock Exchange since 1998. The two trading subsidiaries, Truworths Ltd and Young Designers Emporium (Pty) Ltd. are engaged in the retailing of fashion apparel and related merchandise. Truworths International and its subsidiaries (the group) operate primarily in South Africa. Interim results ending 31 December 2013.
Forward guidance released via the Stock Exchange News Service (SENS) highlights that group retail sales for the period is expected to have increased to R5.9bn, 7.1% higher than that of the prior comparative. The sales growth however is less than half of that achieved in the corresponding period.
Investors will also be weary over the trade receivables book which has grown 9.2% to R4.9bn (83% of group retail sales). The heavy bias towards credit sales is a concern, especially if interest rates continue to rise. Consumers are under pressure as we have seen with significant impairments realized in furniture retailers such as Ellerines and JD Group.
Truworths has advised that it has extensive experience in managing credit risk but sentiment remains poor around consumer credit especially amidst the likelihood of increasing financing costs.
The price of Truworths is in a confirmed short, medium and long term downtrend.
The next anticipated support level is considered at 6200 a break of which would favour further weakness towards the 5200 level.
Source: ProRealTime Charts, as of 14/02/2014
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