Truworths eyes closure of up to 15 UK Office stores

South Africa's Truworths International Ltd is planning to close up to 15 loss-making Office stores in the UK as part of its turnaround strategy.

The day after the company released its full-year results, CEO Michael Mark told analysts of plans to close up to 15 of its roughly 139 stores over the next two years, as well as three “problematic” concessions. He also said there was the possibility of closing more.

Truworths said in its 2019 annual results presentation: “Closure of poor performing stores remains a priority, while enhancing the e-commerce offering to grow sales in a consumer environment trending towards online shopping - footwear is highly conducive to online retailing.”

Up to 15 UK Office stores expected to close

The company cited Brexit uncertainty as a particular issue, with trading conditions and consumer confidence remaining under “intense pressure” ahead of the end-October Brexit deadline.

However, in its 2019 annual results presentation, Truworths said “given current levels of profitability, cash generation, solvency and liquidity, no major business restructuring is appropriate.”

Office entered into debt restructuring negotiations with lenders in June 2019, with Office and lenders appointing advisors Alvarez & Marsal (A&M) and Deloitte.

In the year to 30 June, Office had an operating loss of 94.7 million pounds, affected by an impairment charge of 97 million pounds. Retail sales were up just 1 percent to 279 million pounds while online sales jumped 10 percent.

An amount of around 42.5 million pounds is owed to UK lenders, and Office has cash balances currently of around 28-32 million pounds (net debt levels are currently around 10-15 million).

The news comes a week after Mike Ashley’s Sports Direct announced it had closed eight Jack Wills stores in a similar move to streamline its business amid difficult trading conditions.

Photo credit: Office Shoes, Facebook