Truworths placed under corporate rescue

KINGSTONE ZIMUNYA

HARARE — ZSE-listed clothing retailer Truworths has been placed under corporate rescue, just five months after it voluntarily suspended trading of its securities on the local bourse. 

A Truworths store at Sam Levy's Village, Borrowdale. The clothing retailer finds itself in corporate rescue just five months after its suspension from the ZSE due to failure to release financial statements. 

Appointed Corporate Rescue Practitioner Crowe Advisory (Pvt) Ltd announced the development earlier this week, stating,

"This notice serves to advise that with effect from 7th August 2024, Truworths Limited and its Subsidiaries, namely Topics Stores (Private) Limited and Bravette Manufacturing Company (Private) Limited were placed under corporate rescue in terms of Section 122 of the Insolvency Act [Chapter 6:07]."

In the notice, Crowe Advisory further advised that the first meeting of creditors of Truworths will be held on August 28 at 0800hrs at The Master's Offices — Corner Sam Nujoma Street and Herbert Chitepo Avenue. 

The company will, however, remain listed on the Zimbabwe Stock Exchange under voluntary suspension up until exit from corporate rescue. 

Once one of Zimbabwe's leading clothing retailers, Truworths had lost favour amongst consumers mainly due to the advent of cheap imports and second-hand clothes on the market.  

The company listed on the Zimbabwe Stock Exchange in 1981, and was a major benefactor of the high formal employment during that era which made credit-based lending possible.

However, after economic catastrophes that bedeviled Zimbabwe since the early 90's, Truworths found its fortunes waning. 

Revenues notably declined, averaging US$19 million between 2010 and 2015, then dropping to an average of US$14 million between 2016 and 2018, and further decreasing to less than US$10 million (at the interbank rates) between 2019 and 2023. 

At its peak, the retailer had over 50 outlets around Zimbabwe. 

In July 2022, the firm closed three shops in prime locations in the Harare Central Business District. In the same month, the company announced it would be suspending ZWL credit due to an increase in the prime interest rate to 200% per annum. In February 2023, it resumed credit sales, but only in USD.

In August 2023, the company raised ZWL$2,227,591,570 by way of a rights issue; a conceited effort to save a sinking ship. 

Earlier this year, Truworths' outlets dwindled to just 38 when it closed six shops — three Topics shops in Bindura, Mutare and Masvingo as well as two Number 1 outlets in Mutare and Mt Darwin; and one Truworths Ladies in Masvingo.

When Truworths Zimbabwe announced its voluntary suspension from the ZSE on March 7, Truworths South Africa distanced itself from the company; plainly stating that they had already fully impaired their 34% stake in the business.

It remains to be seen whether the clothing retailer can bounce back from the quagmire it finds itself in.