How Rex Trueform feels the pinch

12 Sep 2017

Operating margins were ripped to shreds at Rex Trueform - the owner of niche fashion retailing chain Queenspark - in the year to end-June.

Results released on Friday showed Rex Trueform's operating margin at a threadbare 0.13% compared with 2% in the previous financial year. This is well below the margins achieved by larger listed fashion retailers like TFG, Truworths and Mr Price. Operating profit came in at just R755,000, well down on 2016's R11.5m figure. The effect on the bottom line was cushioned by interest received of R4.4m - earned from Rex Trueform's cash pile, which started the financial year at R81m but ended the trading period at R58m.

Rex Trueform CEO Catherine Radowsky said that additional operating costs were incurred with the opening of a Queenspark store in Namibia. The Queenspark division recorded an operating loss of R1.9m, compared with a R9.4m operating profit in the previous year, Radowsky said.

There was better news from the company's property division - for which its Rex Trueform Office Park complex located in Salt River, Cape Town, is the main income-generating operation. Radowsky said the property segment managed to generate operating profits of this segment amounted to R8m, falling from R8.5m in 2016. The drop in profit stemmed mainly from one-off maintenance costs, she said.

Rex Trueform intended to develop two more Cape Town-based properties in the medium term, she said. Radowsky noted one of the properties was classified as a heritage site. "This limits the development opportunities and has caused a delay in the development process," she said.

On Friday, Rex Trueform and its holding company, African & Overseas Enterprises, announced the appointment of empowerment pioneer Marcel Golding, formerly chairman of Hosken Consolidated Investments, as chairman. Golding is part of an investment consortium that has effectively taken control of Rex Trueform and African & Overseas Enterprises.

Source: Business Day

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