South African retailer Truworths International is negotiating fresh funding for its UK footwear chain Office in a bid to secure the unit’s viability.
In a business update for the 52-weeks ended 28 June, Truworths said revenue for Office fell 17.4% year-on-year to GBP230m (US$289m).
The chain was forced to close between 24 March to 14 June as part of government-enforced lockdown measures in a bid to curb the coronavirus outbreak.
For the period 15 June to 28 June, when retail stores in the UK were allowed to reopen but only certain Office stores were opened, retail sales were GBP6m, a decrease of 49.7% relative to the comparable prior period.
“The Truworths International board has considered various options for the Office business. The group is in the process of negotiating further funding for the Office business as well as implementing various restructuring initiatives, including a staff redundancy process and store lease negotiations, in order to secure the long-term viability of Office.”
It added the Covid-19 pandemic will weigh negatively on the group’s results for the current period and will result in an impairment of its carrying value of the Office trademarks and right-of-use assets relating to store leases.
“The group’s results for the current period are in the process of being finalised. The board will provide the anticipated range of the decrease in headline earnings per share and earnings per share for the current period when it has reasonable certainty in this regard, in a further trading statement.”
Last month, Truworths, which sells clothes, shoes, jewellery and homeware, said it was exploring “all options” for the footwear chain after group revenues were materially reduced since stores were forced to shut and that it was “actively engaged” in executing operational steps and various strategic responses to best mitigate the impacts of this “unprecedented and continuously evolving situation”. It added it would take an impairment related to Office.
In addition to the Covid-19 impact, Office has been compounded by uncertainty over Britain’s departure from the European Union and by the collapse of department store House of Fraser, where Office had several concessions. Last July, Truworths said it had entered into debt restructuring talks with lenders to explore options for the business. Around the same time, it was reportedly mulling the closure of 15 of its 139 stores over the next two years.