Truworths Limited (Zim): 45% Decline in Units Sold Caused by Suspended Credit Facility

Published On: June 9, 2023Company: Truworths Limited (
What measures could the Group have taken to mitigate the effects of the suspension of credit in July 2022?
The Group could have considered introducing various financing options for customers, such as payment plans, in order to enable customers to purchase items on credit, given the high cost of interest rates. Additionally, the Group could have considered introducing more competitive US dollar prices in order to remain competitive and attract more customers despite the FIU's exchange rate control. Providing more incentives and discounts may also have helped increase sales.

Cautionary Statement

The Directors advise users to exercise caution in the use of these interim consolidated financial statements due to the material and pervasive impact of the technicalities brought about by:

  • The change in the functional currency in Zimbabwe in February 2019
  • Its consequent impact on the usefulness of the financial statements for 2020/2021 financial periods
  • The adoption of International Accounting Standard (IAS) 29 (Financial Reporting in Hyperinflationary Economies) effective 1 July 2019.

Adoption of IAS 29 (Financial Reporting in Hyperinflationary Economies)

The Public Accountants and Auditors Board (PAAB) assessed the impact of hyperinflation in the economy and advised that the conditions for adopting IAS 29 were satisfied with effect from 1 July 2019. Consequently, IAS 29 required that inflation-adjusted financial statements become the entity’s primary financial statements, which the Group has complied with.

External Auditor’s Review Conclusion

The consolidated interim financial information was reviewed by Grant Thornton Chartered Accountants (Zimbabwe) and an adverse review conclusion was issued on the consolidated interim financial information of the Group due to non-compliance with various International Accounting Standards, such as IAS 21, IFRS 13, IAS 1, IFRS 15 and IAS 2.

Trading Performance

Units sold declined by 45% due to the suspension of credit from 1st of July 2022, due to the increase in the prime interest rate to 200% per annum which made credit sales unviable for the business. Sales value performance was negatively affected by price controls enforced by the FIU and informalisation of the economy. Credit sales, which had made up 38.2% of total sales a year prior, were reduced to 0.1%.

Credit Management

The debtors book declined as credit sales were stopped in July 2022. The Group was focusing on repayments of outstanding debts during the period.


The Board deemed it prudent not to declare a dividend.


Trading conditions are expected to remain difficult as a result of existence of multiple devaluing exchange rates and the controls on the formal retail sector. With the economy dollarizing, the business introduced US dollar credit with effect from 1 April 2023, which should see an improvement in sales and together with the Recapitalisation proposal the Balance Sheet should strengthen and sustain the underwriting of US dollar credit.

Useful links

About Truworths Limited (

Truworths Limited in Zimbabwe is part of Truworths International; an investment holding company that retails casual-wear clothing, footwear and fashion accessories in branded stores located in the major towns and cities of Zimbabwe. The company sells fashionwear and accessories under different brand names, including Daniel Hechter, Truworths Man, Ginger Mary, Zeta Inwear, Identity and LTD. Truworths brands are also sold through specialist retail outlets such as YDE, Uzzi, Earthaddict, Earthchild and Naartjie. The boutique range of accessories sold by Truworths includes watches, sunglasses, fragrances and gift ideas. Truworths Limited is listed on the Zimbabwe Stock Exchange

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