INTEGRATED REPORT 2023

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CREATING SUSTAINABLE VALUE

Our ability to create value for our shareholders is closely linked to the value we create for our customers and employees, as well as other stakeholders, including suppliers, regulators, lenders, landlords, governments and the broader society in which we trade.

 
HOW WE CREATE VALUE
HOW WE MEASURE THE VALUE CREATED

SHAREHOLDERS

Our shareholders are the principal providers of financial capital and by delivering sustainable, long-term value, the Group ensures continued access to capital.

Refer to Our Business Philosophy for our Vision for shareholders

HOW WE CREATE VALUE

 

  • Delivering on short and medium-term action plans and projects to achieve the Group’s strategic objectives
  • Preserving and expanding our world-class margins by growing revenue faster than expenses over time
  • Maintaining tight control of operating and capital expenditure
  • Generating healthy returns and maintaining an efficient capital structure
  • Managing the accounts portfolio efficiently and responsibly
  • Prudently managing cash, working capital and gearing levels
  • Returning funds to shareholders through dividends and share repurchases
HOW WE MEASURE THE VALUE CREATED

 

  • Gross margin, operating margin, inventory turn, return on equity, return on assets, and asset turnover are within management’s guided target ranges
  • Return on invested capital is greater than the weighted average cost of capital
  • Dividend growth
  • Long-term share price appreciation

CUSTOMERS

The members of the public who are our customers are the consumers of our products and services and our primary source of revenue. This revenue-generating capability enables us to create financial value for shareholders ultimately.

Refer to Our Business Philosophy for our Vision for customers

HOW WE CREATE VALUE

 

  • Offering fashion which enables customers to look attractive and feel successful and confident
  • Designing, procuring and selling wide ranges of curated and tasteful apparel, footwear and homeware of superb quality and intrinsic value
  • Showcasing unique aspirational fashion brands through an extensive footprint of exciting and visually appealing stores complemented by the convenience of online shopping
  • Enabling customers to buy merchandise by offering multiple payment methods, including account payment and lay-by options
  • Developing knowledgeable employees to service customers with passion
  • Launching new merchandise brands and store concepts to maintain customer appeal
  • Delivering good quality and value in the products we offer
HOW WE MEASURE THE VALUE CREATED

 

  • The net promoter score measures customers' likelihood of recommending Truworths and Office, respectively
  • Growth in retail sales
  • Growth in new account applications and the number of active accounts are indicators of the demand for Truworths' merchandise
  • Social media following is an indication of the fashionability and desirability of merchandise
  • Growth in our loyalty programme base
  • Monitoring online customer engagement metrics

EMPLOYEES

Through our employees, we strive to create value by meeting our customers' fashion, quality and service needs, and by providing the Group's business support services.

Refer to Our Business Philosophy for our Vision for employees

HOW WE CREATE VALUE

 

  • Providing employment and creating job opportunities
  • Transforming the employee base to reflect diversity and equality
  • Preserving jobs, even during challenging times, through prudent human resource practices
  • Creating an inclusive environment where employees are motivated and encouraged to contribute innovatively and passionately
  • Paying employees market-related salaries and benefits and rewarding employees for excellence in contribution through incentive schemes
  • Encouraging learning and sharing of knowledge and developing staff to exceed customer expectations
HOW WE MEASURE THE VALUE CREATED

 

  • Job maintenance and creation, through the number of permanent employees
  • Diversity, employment equity and gender equality through the percentage of employees from designated groups
  • Employee satisfaction and retention, through the annual turnover rate of permanent employees
  • Commitment to training and development through skills development expenditure
  • Organisational surveys which measure perceptions of our adherence to our Values
  • Review of exit interviews with departing employees to understand where we are falling short of delivering on our Values

OTHER GROUP STAKEHOLDERS

Our broader stakeholder base includes groupings that have a material direct or indirect impact on our business and influence our ability to create value in the long term.

HOW WE CREATE VALUE

 

  • Contributing to national and local governments and regulatory institutions
  • Supporting local and offshore manufacturers of products, lenders, service providers and property landlords
  • Assisting in growing and developing society through good corporate citizenship, transformation, black economic empowerment and job creation across the supply chain
  • Adopting sustainable business practices aimed at minimising our impact on the environment and contributing to the betterment of society
HOW WE MEASURE THE VALUE CREATED

 

  • Government: contribution of corporate taxes and duties and legislative compliance
  • Suppliers and landlords: purchases of merchandise and services, and rentals paid
  • Lenders: meeting interest and capital repayment obligations timeously
  • Communities and broader society: social value created through corporate social investment, supplier and enterprise development, and environmental programmes

KEY PERFORMANCE INDICATORS AND TARGETS

FINANCIAL

Metric 2023 2022# Medium-  
term  
targets  
Local  
benchmark@
Global  
benchmark^
Report
reference
Gross margin (%) 52.5 53.5   49 – 53   43.6   54.3   Chief Financial Officer's report
Operating margin (%) 24.0 24.3   18 – 23   13.3   12.8  
Return on equity (%) 48 48   31 – 36   20   15  
Return on assets (%) 30 32   22 – 27   14   11  
Inventory turn (times) 4.2 4.5   3.5 – 4.5   2.3   3.3  
Asset turnover (times) 1.2 1.3   0.9 – 1.3   1.0   1.0  
Annual  
target  
Return on invested capital 28 35   >WACC*      
# Corresponding 52-week prior period.
@ The local benchmarks are based on the average ratios for comparable JSE-listed apparel retailers, being Mr Price Group (year ended 1 April 2023) and TFG (year ended 31 March 2023).
^ The global benchmarks are based on the average ratios for listed global fashion retailers, being H&M (year ended 30 November 2022), Inditex (owner of the Zara fashion chain) (year ended 31 January 2023) and Lojas Renner (year ended 31 December 2022).
* Weighted average cost of capital = 14% at June 2023 and June 2022.

SUSTAINABILITY

Metric 2023 2022 Target   Report reference
Board diversity
Female representation (%) 33 31 30~ Governance creating value
Black representation (%) 25 23 30~
Employment equity
(South Africa only)
Female representation (%) 75 74 74   Truworths Human capital report
Black representation (%) 94 94 94  
Environmental management
Store electricity carbon emissions (South Africa only) Wh/m2 14.97 15.88 17.00   Environmental, Social and Sustainability Governance Report 2023
~ Medium-term target.
INTEGRATED REPORT 2023