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From the onset of the pandemic, there was no certainty as to the long-term impact on our business, but we knew it would eventually end and during the pandemic period we should take advantage of short-term opportunities that would support the business in the long term. Strategically, we followed the principles underlying our Business Philosophy and remained true to our DNA to guide us through these difficult times, and we adopted a more conservative approach to protect stakeholder interests.

As we emerged stronger and more resilient from the pandemic in South Africa (SA) and the United Kingdom (UK), the Group adopted a more expansive growth strategy. We identified opportunities in categories within our target markets where we were under-represented; we capitalised on consumers returning to work and the return of celebratory and social events; we welcomed the return of the London high street and tourism; and we saw the quality of our account portfolio rapidly move towards pre-COVID-19 levels.

This expansive and optimistic strategy served us well in the new environment, and contributed to 2022 being a record year for the Group as we reported the highest headline earnings in our history.


The pandemic caused wide-scale global supply chain disruption, which has been compounded by the war in Ukraine. Higher global energy prices and pressure on food resources have significantly increased inflation in many countries around the world.

The civil unrest in KwaZulu-Natal and Gauteng in South Africa in July 2021 and the flooding in KwaZulu-Natal in April 2022 resulted in trading being negatively impacted in these provinces.

While trading conditions for our Office chain in the UK were much improved, the consequences of the Ukrainian conflict and the impact of the COVID-19 era have affected sentiment, with consumer disposable income under pressure in the high inflationary environment.

We successfully navigated these macroeconomic headwinds through the continued focus on our Business Philosophy, backed by our robust balance sheet and ability to manage margins and costs effectively.

Group retail sales increased by 9.0% (52 weeks: 6.6%) to R18.5 billion, with sales in the second half of the year growing by 12.7%^. Retail sales in Truworths, which comprises mainly the various Truworths and Identity businesses in South Africa, grew by 7.5% (52 weeks: 5.0%) to R14.0 billion. Account sales comprised 69% of Truworths' retail sales.

Office's retail sales recovered strongly in the post-pandemic environment and increased by 16.6% (52 weeks: 13.8%) to £224 million. Store sales grew by 74% as consumers returned to the high street. Online sales contributed approximately 45% of retail sales.

The Group's gross margin strengthened by 250 basis points to 53.5% (2021: 51.0%), with Truworths' gross margin increasing to 56.7% (2021: 54.1%) and the Office gross margin expanding to 44.2% (2021: 41.5%).

The strong operating performance is reflected in the Group profit before finance costs and tax increasing by R1.4 billion or 45.4% to R4.4 billion.


We target the emerging and established middle class and better-end, fashion-conscious South African and UK consumers. In SA, we have strengthened Truworths' position as the leading aspirational, better-end, mass-market retailer for youthful, fashionable consumers who are seeking fashion at well above average quality. In the UK, Office and Offspring have consolidated our leadership in the 'London fashion girl' and sneaker-obsessed communities, respectively.

Our various fashion brands within Truworths (refer to Truworths Market-leading brand portfolio) cover many lifestyles and we have expanded the brand portfolio to increase customer appeal and focus on product categories where we are under-represented. We have continued to refine our recently launched Fuel (young men's street fashion) and Sync (value fashion) brands and expanded retail concepts, including the Identity larger format store, Truworths Kids larger format multi-brand store, and Context brand within Truworths.

Shareholders will recall that we entered the value segment of the fashion retail market in April 2021 with the launch of the Primark brand, targeting young men and women with quality fashion at excellent prices. This was followed by the introduction of Sync as a sub-brand of Primark. Eleven Primark and five Sync stores were opened in the experimental launch phase of the brands. Following the period-end, an amicable settlement was reached with Primark UK in terms of which the Primark trademark in South Africa reverts to Primark UK. Truworths will continue with its own Sync brand in its five existing stores and the remaining 11 Primark stores will all be converted to the Sync brand within a few months. All future stores in the value fashion segment will be branded Sync.


The strategy to develop an integrated vertical supply chain in Truworths has gathered momentum. Barrie Cline, the womenswear apparel design department acquired in 2021, was successfully integrated into the Truworths Africa Design Division. This has created a combined ladies', men's and kids' internal design division which is focused on local production.

After the end of the reporting period, Truworths acquired Bonwit, another exclusive womenswear design department that has also been a long-standing supplier exclusively to Truworths. It is worth noting that Bonwit was previously owned by Truworths decades ago. Bonwit will be integrated into the Truworths Africa Design Division alongside Barrie Cline to create a powerful and unique Truworths design capability. The Barrie Cline, Bonwit and Truworths Design departments are complementary and specialise in a wide variety of different product categories across the spectrum of product within Truworths' portfolio. They provide us with a compelling strategic advantage in our ability to rapidly create unique, innovative and trend-focused designs for the business.

We continue to support and invest in local manufacture, particularly our exclusive design centres and cut-make-trim (CMT) partners, to secure local production. Domestic supply now accounts for 45% of our apparel orders, which supports our fast fashion and quick response models to maximise speed to market.

Agreements have been finalised for the development of the new Truworths state-of-the-art distribution centre near Cape Town International Airport. Construction of the 50 000 m² facility is planned to start in the second half of the 2023 financial period and is expected to be completed in the 2025 financial period. The facility will cost an estimated R930 million and is designed to improve efficiency and accommodate growth in the business for the next 15 years.

Central to the design and construction is the focus on sustainability, with green building features being incorporated to maximise energy and water efficiency. The facility will be green building-certified (targeting Edge Advanced) on completion, and management has initiated engagement with a financial institution to finance the cost of the building through the green loan mechanism.

Office also operates a centralised distribution model and during the year consolidated its two warehouses into the existing distribution facility in Kilmarnock, Scotland, resulting in substantial cost savings.


The Truworths Emporium store concept is unique and is not readily seen elsewhere in the world. Within the Truworths Emporium store, customers can shop across multiple, predominantly exclusive brands of unique and distinctive clothing that covers multiple lifestyles (refer to Truworths Retail presence). The brand offering is complemented by shoes and bags, accessories, and our beauty and homeware ranges. All this is carefully curated to present a compelling and enticing offering to the Truworths target customer.

Truworths' Emporium always aims to trade from the best positions in fashion courts of shopping malls and is recognised as one of the fashion anchor tenants in malls and shopping nodes throughout South Africa.

The design for the exciting new Truworths 'store of the future' has been completed. This design will be utilised in new and refurbished Truworths Emporium stores from the 2023 financial year onwards.

Truworths' e-commerce business increased transaction volumes by 36% and accounted for 3% of retail sales in the period. We launched Identity online and introduced a new cloud-based website platform, which has vastly improved the customer experience.

In the past year, Truworths opened 15 stores and closed 23, with the retail footprint now comprising 754 stores in South Africa and 31 in the rest of Africa. Trading space is planned to increase by 2% for the 2023 financial year.


While the credit health of the South African consumer is starting to show some deterioration, specifically in the last quarter of the reporting period due to the macroeconomic environment, the Truworths credit portfolio continues to perform well with key performance metrics at historical norms. We do plan for the possibility of some deterioration in the quality of our book, but we believe that our expected credit loss allowance adequately accounts for anticipated book quality. The book is cautiously managed through the consistent application of proven strategies, ongoing testing of new strategies, regular updates to our scorecards and models, and through the regular scoring of all existing customers. We believe the portfolio will continue to be well managed in accordance with our historical risk and profit-based norms.

Truworths has continued the trend, which has been prevalent over the past few years, of unprecedented demand for new accounts, with applications growing by more than one million to a record 5.0 million (2021: 3.8 million) applications in the period. Our account applications have more than doubled in the past five years. Notably, 27% of all applicants are aged between 18 and 24 years, and 48% are under 30.

The Truworths debtors book increased by 9.4% to R5.9 billion and account sales comprised 69% of retail sales. Stronger account collections contributed to the expected credit loss allowance improving to 20.9% of gross trade receivables from 23.4% at June 2021. New account payment options were introduced in the period to enhance the customer experience and collections.

Active accounts increased to 2.6 million, with account holders able to purchase unchanged at 82% and overdue balances improving to 14% (2021: 15%) of the book.

The current health of the accounts portfolio highlights both the resilience of the customer base and the demand for Truworths' quality, aspirational fashion.


The turnaround in the performance of our shoe and sneaker chain in the UK continued, with store sales recovering by 74% as consumers resumed social and work activity and tourism rebounded. Office grew profit before finance costs and tax, by over £30 million.

Favourable negotiations with landlords and the better-than-expected post-pandemic recovery resulted in fewer store closures than planned. Six unprofitable stores were closed while several leases were renegotiated on short-term flexible terms, which favoured Office in the uncertain retail trading environment. Office now has 92 stores, mainly in the UK.

Office plans to invest in opening two new stores in key locations in 2023, while four strategically important stores are planned to be modernised. As part of the ongoing review and rationalisation of the Office store portfolio, leases will be renewed based on the strategic importance, location and profitability of stores. Trading space is expected to be reduced by approximately 4% in the 2023 reporting period.

Through our long-term partnership with the flagship Selfridges department store on Oxford Street, a global leader in innovation, we trade out of our men's and women's Offspring stores. They service the sneaker-conscious community and are considered by many to be at the heart of sneaker culture in London and the rest of the UK. Our new Offspring store, which will open in King's Cross, will be positioned across from the new Google UK headquarters. This will be an internationally groundbreaking store concept focusing on the Offspring community as the lifeblood of the store.

The remodelled Office stores on Carnaby Street and King's Road, together with our new Office store in Battersea, which will open during 2023, will take their lead from the highly successful design of Office at Oxford Circus and in moving Office store design to new levels to appeal to the fashion-conscious London customer.

Office continues to build collaborative and strategic partnerships with some of the most sought-after brands in the global sneaker and footwear market. The strength of these partnerships ensures a mix of highly desirable product that is targeted at fashion-savvy consumers.

The merchandise team has focused on revitalising the range of higher margin own-brand, made-to-order (MTO) footwear. The MTO contribution increased from 7% to 10% of retail sales, with plans to grow this further by expanding the range and introducing luxury shoes, a menswear range and accessories.

Key to the turnaround has been the increased integration of Truworths' buying and planning methodologies into Office. These proven processes have ensured well-balanced ranges, with improved stock management and higher margins through lower markdowns.


I have, with enormous fulfilment, served the Group for 31 years, as Managing Director of Truworths Ltd from 1991 to 1996 and as Group CEO from 1996. I am proud of the many achievements and heights our company has reached through the years, and I am particularly proud of how we have navigated the many challenging periods and nevertheless emerged as a highly successful, modern, competent and leading fashion retailer in SA and the UK.

But mostly, my pride revolves around the commitment, competence, diligence and dedication with which the many thousands of employees in SA and the UK continually contribute to the Group and its brands.

I am enthused by the recently announced appointments of Sarah and Mannie as the Group's Joint Deputy CEOs. Together, they make a powerful leadership team with complementary competencies and skills to lead the business into the future. As close partners, they have toiled tirelessly by my side for the benefit of Truworths, and they show the hallmark of professionalism and symbolise the essence of our value system in that they contribute more than they withdraw through passion, energy and unyielding commitment to the Business Philosophy.

They are supported by 8 Truworths directors and 12 divisional directors, and 5 directors and divisional directors in Office (UK) and more than 40 executives, all of whom have served for many years in our businesses and all of whom are superb leaders. The Group is certainly in good hands as we look to the future.

I am completely committed to support the board's request for me to extend the transition process beyond the November 2022 annual general meeting by retaining the position of the Group's CEO and chairman of the material subsidiary companies, while handing over an increasing number of operational responsibilities to Sarah and Mannie and the executives who report to them.


Our strategy is aimed at creating shareholder value over the longer term. Our Business Philosophy has repeatedly stated in the Integrated Report over many years, that our Vision for our shareholders is 'We are long-term investors in Truworths International because we trust in management's capacity to execute innovative strategies which deliver significant value over time'. The business has been positioned accordingly and our mind-set is long term. We therefore believe the factors that currently differentiate our business will continue to be relevant going forward as we build on our good performance this year.

We will continue our aspirational appeal to the emerging and established middle class and better-end markets, through ownership of a unique and exclusive portfolio of brands which cater for multiple lifestyles. Physical stores will continue to be 'showrooms' for our brands and will remain our main sales channel. In Africa, this will centre on our unique Truworths Emporium concept and in the UK our innovative new store designs for our Office and Offspring brands will elevate and revitalise the store portfolio.

Support for physical stores in the form of 'best of breed' e-commerce technology, convenience and lifestyle will continue to drive omni-channel retailing as digitisation is accelerated and transformed in our markets, especially in Africa (with learnings from the more advanced Office UK experiences), while stores will be adapted to create a seamless omni-channel customer experience.

As consumer shopping behaviour and patterns evolve and change, we have shown our ability to adapt and respond, and be at the forefront of technology and innovation. Many of the lessons learnt from trading through the COVID-19 pandemic will inform our responses to changing market dynamics in the future.

We foresee that our internally funded and managed credit book will remain the primary driver and enabler of sales to the Truworths mainstream middle-income customer.

As always, our business will be underpinned by a strong balance sheet and robust cash generation, with an active capital management strategy to maximise returns through a combination of share price appreciation, dividend payments and share buy-backs. Organic growth will remain the Group's favoured approach, supported by bolt-on acquisitions in new and strategic categories where we are under-represented.

The barriers to entry to replicate our model are high and South African retailers have proven to be globally competitive and resilient to international entrants into our home markets.


Thank you to our Chairman, Hilton Saven, for his leadership of the board and my fellow directors for sharing their wealth of wisdom and experience in guiding the affairs of the Group.

My heartfelt appreciation and admiration go to our executive teams and all our employees in both Truworths and Office who have produced an exceptional performance in a most challenging macro trading environment.

Most importantly, thank you to our loyal customers who support us in our stores and online and we look forward to continuing to exceed your expectations for quality fashion apparel and footwear in the year ahead.

Michael Mark
Chief Executive Officer

There is concern throughout the world regarding the macro political and economic environments, the continued geopolitical uncertainty created by the ongoing Ukrainian war and the tightening monetary policies which global central banks have embarked on in an attempt to curb inflation.

South Africa has enormous potential with its abundant natural resources, natural beauty, innovative people and a constitution that embodies the right of speech, religion, press, assembly and petition. Furthermore freedom of association is recognised as a fundamental right in South Africa. Yet the continued deterioration in infrastructure, particularly power, and the medium-term economic contraction is a serious challenge for society and for all South African businesses. The UK too has many macroeconomic challenges, although hopefully these are not long term.

Consequently, the trading environment is likely to remain constrained in the year ahead as consumers in both the Africa and UK segments contend with escalating fuel, electricity and food prices, together with steadily rising interest rates.

Despite this, I am confident that our Group will continue its long-term track record of delivering above average returns on equity and investment, and continue to generate cash even in challenging times. My firm belief is that our business model will once again prove its resilience and that we will emerge with a strength and determination that will continue to endure in the years ahead.

We are expecting product inflation for the 2023 reporting period to range between 13% and 15% as a consequence of rising input costs, particularly in fabric prices.

In this constrained consumer-spending environment Truworths plans to sustain growth by focusing on:

  • increasing market share in key categories;
  • utilising our skills in credit and the strength of our book;
  • launching new and expanded retail store concepts and product ranges;
  • improved supply chain efficiency and speed to market; and
  • continuing to invest in technology, including the omni-channel experience.

We plan to build on the post-COVID-19 recovery and sustain the turnaround in performance by focusing on:

  • improved stock management;
  • increasing the proportion of higher margin product;
  • stabilisation and enhancement of the store portfolio;
  • continued strengthening of key brand relationships; and
  • investment in internal systems.

This is in the context of the UK retail sector facing headwinds from inflation and rising fuel and energy costs. Consumer inflation could peak as high as 18% in early 2023 before starting to moderate.