Salt River-based fashion retailer Rex Trueform (Rextru) – one of Cape Town’s most enduring family-owned businesses - has picked up the profit thread again – reporting operating profits of close to R16m in the half-year to end December. This is encouraging news after the company endured a R5m loss in the corresponding six months last year and finished the year to end June 2014 with its income statement a rather scary R17m in the red.
Rextru’s revenue increased by 4% to R277m, while other income – which includes rental income on its properties – more than quadrupled to R10,5m. It must be pointed out, though, that the operating profit figure did include an amount of nearly R4m that related to the sale of the company’s Atlantis property (which once housed clothing manufacturing interests.)
Rextru CEO Catherine Radowsky said the core Queenspark retail segment managed a modest increase in turnover of 2,9% - impacted by the closure of three unprofitable stores and the opening of two new stores. But she noted that certain initiatives introduced in the interim period helped push the all-important gross profit margin increased to almost 55% from 47% previously. This meant a 20% increase in gross profit.
While the re-fashioning of Queenspark’s performance is encouraging, the real intrigue at Rextru arguably lies in value enhancing property development endeavours. Radowsky said the main focus of the property segment had been the development of the Rex Trueform Office Park (RTOP) in Salt River, which is near completion. She said the property segment revenue showed an improvement during the year, more than doubling to R7,6m mainly due to the additional rental income received from the RTOP.
Looking ahead, Radowsky warned that retail sales in the second half of the year were traditionally lower than the first half.
“This, together with electricity loadshedding and increased competition, is expected to constrain profit growth during the six months ending June 2015.”
She explained that in order to grow turnover in the 2016 year and beyond the company would introduce initiatives to increase the turnover of the existing store base and increase Queenspark’s footprint in South Africa by the roll-out of further stores.
Turning to the property segment, Radowsky noted that the RTOP was located in a vibrant area within Salt River – adding that this building was in close proximity to two other group-owned properties, which held development potential. “Feasibilities in respect of these properties are to be prepared in due course.”
She cautioned, however, that one property was classified as an important Heritage site. “This limits the development opportunities, and will cause a delay in the development process.”