SALT RIVER-based Rex Trueform, the fashion retailer now controlled by local empowerment pioneer Marcel Golding, saw a smart performance from its Queenspark chain in the year to end June.
Fortuitously, the revamping of Queenspark has coincided with Rextru’s diversification efforts starting to find traction.
Golding, who serves as company chairman, said the Queenspark store growth strategy had progressed well with the opening of eight new stores and the closure of one during the past financial year.
Golding noted: “Where feasible and the risk of cannibalisation is low, Queenspark continues to introduce new brands to complement the existing ranges.”
Rextru’s retail segment turnover increased by 15.5% to R678.9 million Golding said, discounting and increased promotional activity negatively impacted the gross profit margin – which decreased to 52.6% (2018: 54.4%).
But despite the decrease in the gross profit margin, increased sales volumes at Queenspark drove gross profit up by almost 107% to R 357 million.
Golding looks intent on running a tight ship with the increase in operating costs increasing only 4.4% to R330 million. This helped Rextru’s operating profit soar almost threefold to R32.6 million.
Looking ahead, Golding expected difficult trading conditions is expected to continue over the short to medium-term.
Golding said fresh opportunities to roll out new stores and to take advantage of a tenant friendly property environment remained key to ensuring growth at Queenspark.
RexTru has always held property interests aligned to its old manufacturing premises and head office. But more intriguing is the recent shift into water through recently acquired subsidiary, Ombrecorp and its investment in SAWW.
In this regard Golding has already changed the corporate identity from Rex Trueform Clothing Company Limited to Rex Trueform Group Limited. This, he said, was to better reflect the diverse nature of its business.
The new water business poured a not insubstantial R7.1 million into RexTru’s after tax earnings for the financial year.
Golding reckoned the investment into water infrastructure sector was an important milestone in the diversification of the group. “The sustainable management of the country’s water resources is inextricably linked to the macro economy. A combination of poor infrastructure, mismanagement of state funds, lack of accountability and low rainfall patterns have seen the increased prevalence of drought-stricken areas across the country.”
Golding said the skills and experience inherent in the SAWW group, meant RexTru was ready to play a key role in water security across the country.
He said the SAWW group’s operating subsidiaries were performing optimally and were successful working examples of private-public partnerships within the water infrastructure sector.
The property segment now also looks a solid business – centred on the re-developed Rex Trueform Office Park complex in Salt River and two undeveloped properties in Salt River and a property in Wynberg that serves as a distribution centre to Queenspark.
Rextru’s property segment revenue increased 5.8% to R22.8 million, but operating profit decreased by 4.3% to R9.6 million due to above-inflation increases in operating and inter-segment costs.
Golding said despite the local property market facing challenging economic times, the Salt River and Woodstock nodes have seen a remarkable rejuvenation over the last decade as many seek to live and work closer to the Cape Town CBD.
He added that the rejuvenation has been aided by the fact that the area falls within a designated Urban Development Zone (UDZ) – resulting in attractive tax benefits for developers. “Many old buildings (predominantly redundant factories) have been revamped into mixed-use developments. With the current property portfolio, the group is well positioned to both contribute and benefit from future development in the area.”
