JOHANNESBURG (Reuters) - South Africa's Truworths International Ltd <TRUJ.J> plans to close about 58 of its loss-making Office shoe stores in Britain, its CEO said on Friday, with an overhaul of the remainder of the retailer expected to boost sales and margins.
The COVID-19 pandemic has had a major impact on the Office business, already battling tough conditions due to Brexit transition and low consumer spend.
The latest pressures forced Truworths to undergo another extensive review of the business, which has 129 stores, with competitors swarming in with offers, it said.
In the end Truworths decided to keep Office and offer it funding of 6.5 million pounds ($8.57 million) in the form of a secured revolving credit facility.
"In the restructuring process of Office, we really had a good look at it and it became very clear to us ... that you know Office has its challenges but let's look and make sure that we don't overreact to this crisis," Truworths CEO Michael Mark, who is retiring in two years after 31 years at the helm, told analysts.
About 28 stores are planned for closure during Truworths' 2021 financial year as leases expire, while a further 30 will be closed during the 2022 to 2024 financial years, Mark said.
Management is also hoping in the next two to three years to grow its private label shoe brands, which have shrunk to about 10% of overall brands at Office in order to improve gross profit margins as those brands are high in margin.
In South Africa, it will launch a new brand under its Uzzi menswear brand and standalone stores as well as expand ranges of its Identity and Hey Betty clothing brands over the next 6-9 months.
It also plans to launch e-commerce stores for Identity and for its new kids concept store, which combines its LTD Kids, Naartjie and Earthchild clothing brands in order to capitalise on the expansion of online shopping in South Africa.
($1 = 0.7584 pounds)
(Reporting by Nqobile Dludla, editing by Louise Heavens)