Truworths International Limited (TRU) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to the Truworths 2025 Annual Results Presentation. In the room with me are five of my colleagues. I won't introduce all of them to you at this stage, but I will refer some questions to them. But Manny Cristaudo and Sarah Proudfoot are both with me, the joint Deputy CEOs. So when we get to question-and-answer time, I'll try and refer as many questions as possible to the appropriate people. I'm going to start with the presentation. I'm going to go quite quickly through the numbers because you all have them already, but we'll try and give some insight into some of them if we can. And then there are slides contained in the presentation that I don't -- I might not even refer to them, but they're for your sake to look through afterwards. And I know, as usual, we get tons of questions after the presentation over the next couple of days. So you're welcome to send them to us, and we will respond as usual within 12 to 24 hours. The agenda is, as normal, finance, accounts, strategy, social, governance environment and then general questions. As an introduction, I want to talk straightaway about the 7-week update, where it was disappointing in the market. Besides being disappointed in our numbers, we're disappointed in the 7-week update. I want to give a little bit of insight into that. Firstly, in Truworths side, we have been working on a new markdown optimization program. It's early stages, but this is the first time we are using it to the beginning of the new thinking. And considering that it is a July end season sale, it's quite an important time. Essentially, the goal is a simple one. It's pretty obvious. Mark downs one of our biggest costs. So if we can achieve the same outcome with a lower cost, then we're trying to do that, which is what optimization is about. You don't want to sell coats on sale when it's cold. But you also want to make sure you get to your terminal stock targets at the right time. So optimization does that. And we've got a more sophisticated thinking and we tried to embark on it. So we have spent significantly less on markdown in the first 7 weeks than we did last year. That has impacted sales. Margin, of course, then is positive. But on that end, I can't tell you if it's going to work because I only know when we -- in a couple of weeks' time. If we get our terminal stock target acceptably, then I'll know it worked, if the cost has fallen out. That is the main reason that Truworths was negative in sales, but slightly positive in margin. Office is a completely different story. They don't have the same issues with markdown. They sell shoes and sneakers. It's a little bit different. But in Office, they have had a little bit of a tougher run in the last -- a short while, I'd say, 2 months or so, primarily because they're competing with last year. One of the brands was absolutely flying last year. And while that brand and the others are still steady as she goes and doing well, their base is quite high in this particular one. I'm not going to say which one it is. So that has impacted Office a bit. But the other thing is the non like-for-like in Office. Because of the annualizations impact over the last couple of months 2 or 3 is quite low. But it starts picking up quite significantly around November this year, October, November. And then for about 14 months, all the way until December '26, if all things go according to plan, the escalation in real estate space, new space and remodeled non-like-for-like space is quite significant. So that's as best I can give you update. One's always got to be careful about the first 7, 8 weeks of new season because everyone is very heavily involved in markdown activity, but that's the best I can do to give you a bit of insight there. It has been a disappointing year. At the beginning, our expectations were cautious, mildly optimistic. We saw lots of analysts, and we were optimistic. I think we continuously say cautiously so, anticipating a gradual economic -- we didn't think it will be boom times, but we were hoping it to be improving economy. But somehow, the macroeconomic conditions were tougher than we would have liked in South Africa with low GDP growth and persistently weak consumer confidence. I'll talk a little bit about the TransUnion Index soon, which most of you are very familiar with. Because we're sort of slightly optimistic but still feeling cautious, we adopted a very cautious approach to higher risk credit, and I'll talk a little bit further about that soon. Which, to some degree, dampened sales growth. But I'm not sorry we did that because you'll see why, our credit book is really settling down quite nicely now. So that was important for us to do that. We, as usual, managed expense as well. And in the Truworths Africa context, we continue to be quite conservative real estate. In other words, we're consolidating space where we can and we are avoiding rapid expansion unless it's an obvious opportunity. That's been the approach for the last couple of years, and it was the last year. We were waiting for improvement, but we still adopted quite a conservative approach. I knew there's a lot of questions about our new distribution center near the airport in Cape Town. It did initially face some teething operational difficulties during our winter 2025 period, for the international global players, that means January to June. But especially around April, the peak winter time, we did have some teething problems. The whole DC got running a little bit later and a little bit slower than we would have liked. The problems were very speedily resolved, I must say the team was amazing in fixing the issues that they had, technology and manpower and getting used to the new DC because it's so much bigger and more sophisticated than the old one. And it took a couple of weeks to do that. The new DC is now expected to be fully operational with over 90%, 9-0%, of Truworths' merchandise operating through it by the end of quarter 3, end of September. In other words, even now, it's ramping up speedily every week. And by the end of September, we'll be at what we consider to be perfect state. So we're very happy with that, which means that we'll be ready for the peak season October, November, December period. Office does continue to outperform the market despite some challenges in the U.K. macro. You all know about that. The real estate program is delivering strong results. But as I alluded to at the beginning, because of the timing, the like-for-like is quite low at the moment. It picks up every month a little bit. And from November, it starts being much more aggressive and it speeds up all the way through -- and the biggest months, as I recall, are April, May, June '26 and carrying on until December '26 and thereafter. A lot of runway in the U.K. And I think all of our shareholders are very familiar with Office now and the unique position in Office and Offspring, the sneaker head business, and Office, the ladies' fashion and some men's as well they're positioning. The group continues to be highly cash generative. I know that we've received a lot of compliments for that and to deliver best-in-class returns and all of our medium-term targets were met or exceeded. We have a strong balance sheet, So we're net positive cash now. And there is an improving credit book health, but it's sort of tentative. But we are, I'm sort of loath to say it because I seem to say it too frequently, but we are starting to feel again more optimistic about the future. I just want -- the guys have been looking at the correlation between the CCI and the GDP versus the sales growth in Truworths since 2004. And it's quite remarkable to look how Truworths aligned so closely with GDP growth and the CCI. The consumer confidence, GDP and Truworths sales seems to be strongly correlated. I know the analysts are very familiar with our strategy and our positioning of aspirational, more expensive, higher-quality merchandise sold to average South Africans. And then, of course, for them, it's quite expensive so it's on credit. We'll talk more about the merchandise and the strategy as we move forward. Talking about the TransUnion Index, which the shareholders who know us well know that we, as credit retailers, are being so strong in Africa with 70% of our sales on credit to our own book, our own customers. The TransUnion Index gives you an indication and it's a strong one because we really believe in it, about the prospects in the next -- of the credit market, depending on what cycle it's in. And we prepared this graph to try and show you that in the periods '15 to '19, that the index pretty much was most of the time above 50, which means it's improving. And that's just until the COVID era, and you had a whole lot of disruption there. And it's been pretty tough since then, it did recover from '23 onwards, but it was still below 50, which means it was worsening, but at a slower pace, until it got to over 50 in December or around about the third quarter of '24. And now we have had 2 quarters above 50, 53 there and you see 52. That is a good sign but it's sort of tentative. And TransUnion, the way they talk about it, they say, the recovery is on the way but it remains fragile. So -- and you see it is seeming to dip a little bit from the one quarter to the next. So obviously, we are hoping that it will have a more steady consistent above-50 stay there for quite a long time, we're hoping. So when you look at background and the tough macroeconomic circumstances which we've been facing in Africa, Truworths Africa, the result and the impact has been -- it's been a very challenging period for a good 4, 5 years. The average annual space growth has only been 0.3%. That's been a strategy, intentional. It helps us contain costs. And we don't want to -- and we already are very, very well exposed in South Africa and neighboring countries. Our average annual growth in active accounts is 1.9% and in a tough consumer environment. Our average product inflation, 4% over the past 5 years, but there's an element of post-COVID in that. And the last year has only been 1.2%. And obviously, given our positioning and the tough economy and the lack of consumer confidence, we are very aware of the need to maintain our differential in quality and fashionability to the rest of the market, but not let our premium price get so inhibited, so much higher than our competitors that it inhibits our sales growth. So Sarah and her team are spending a ton of time trying to sort of get that balance right. And then average sales per account customer has increased only 0.8% compounded over the last 3 years. So it's almost -- most of it is in a kind of a holding pattern. In the U.K., the turnaround since post-COVID has been fantastic in '22, '23, '24, '25. And we really are very confident about the U.K. I'm not saying there are no headwinds. I'm not saying there's no challenges there, but we seem to have quite a lot of runway ahead of us. As I said, it starts ramping up especially from around November. The group strategy, therefore, has focused on the last period or 2 or 3 even in the last couple of years on cash generation, focused capital expenditure, that's in store renovation, not a lot in the U.K., some technology. We've been quite aggressive in upgrading the U.K. and our own technology in South Africa and the new DC, of course, distribution center. And our money has been focused on that. The Truworths Africa credit and space expansion I mentioned has been constrained, intentionally. We've been careful about what we've done with credit and with space in South Africa. But we have spent a lot of work and effort and time on our internal processes, our infrastructure and our technology in Truworths Africa. And we've made some what we think are massive inroads, and we are hoping the benefits of those really start to come to the fore in the next couple of years, starting now. I mean, I mentioned the markdown optimization and the other ones I'm going to talk about soon. Some of them are facilitated by the amazing new DC that we have, which gives us so much more power and influence in how we distribute our stock and plan it and buy it and so on. And so we feel we're ready for the next 3 or 4 years in South Africa. When I read the commentaries from most of you guys as well as the banks and the experts, GDP in South Africa until 2027 could average 1.5% to 1.8%. We would like it to say 2%. That's, for us, a magical number. But 1.5% to 1.8% is much more appealing than 0 to 0.5% and 0.6%, 0.7% we've had in the last couple of years. And they are prospects of interest rate reductions. So with slightly more optimism about macroeconomic environment over the next years, expansion in real estate and credit in Truworths Africa is likely to be escalated, as is the real estate and technology development in the U.K. Looking at the financial numbers, which I will go through quite quickly because you can read them afterwards, as I said, and you can send questions to us. We did meet all of our medium-term targets. At this stage, the Board has decided not to adjust them even though we exceeded return on equity. Notice that we're way above all the local and international benchmarks with the slight exception of gross margin. We're way ahead of the local benchmark, but mildly below the international one. And the other criteria, we were way above. If you look at the pro forma, which I urge you to focus on the pro forma because it takes out all the noise in the figures. The group sales were up by 3%, but profit was down by 1% and diluted it down by 3%. If we look at the dividends over the last couple of years, return on equity and return on assets. Asset turnover has been steady. They're 1.1 and 1.3. There is a slight decline there. But we think that's fine because it's post-COVID. The return on assets, return on equity has all been declining to lower levels than we've had. And although we were way above the benchmarks, we are not comfortable with the decline and we obviously are very aware of the need to not build up too much cash in our balance sheet. These are normalization of return on assets due to the growing cash balance and the impairment reversal. The next slide shows our critical measure, return on invested capital, versus our weighted average cost of capital. Similarly has been declining, but the differential is still about 9%. And you'll note that it's not very different from 2021 when the ROIC was 24% and is now 23% post-COVID and all the events after that have made a difference. Our goal is to keep it around this level and not to let it continue to decline. And we do have strategies and plans to achieve that. I've said before, and you do know this from the numbers, we are now cash positive. ZAR 720 million net cash and positive in June '25, ZAR 306 million negative the year before. And this is the group, ZAR 2.9 billion cash generation for the period. We paid dividends of ZAR 1.9 billion. Sorry, I'm skipping there. But there are monthly impairments. So if you take those into account, the cash realization rate for the group drops from 101% to 90%, and the cash after paying the monthly impairment was ZAR 447 million. So a highly cash-generative group despite the expansion in Office and the DC. This is the Truworths Africa pro forma numbers. And again, I think you know them. The sales were roughly 0, the retail sales. Gross profit, slightly down, but profit before finance costs and before tax dropped by 10% and 7%, respectively. There are some other factors that have taken that into account. But basically, we can't keep on running our business with lower sales growth. It's just this whole opportunity in our business is top line. It's not really about gross margin. There is some work we can do there and we're all busy with it, I mentioned it already. But it's about getting the top line up. Expenses are very well controlled. The main expense that went up in the Truworths figures are occupancy costs, grew by 9%. Others are negative. And when you look at a little bit more detail, I'll show that later on, but rental went up actually by about 5% or 4%, depending on how you look at it. And that's more due to like-for-like growth in rental. There are some new space things that happened in the year. The tough top line was across the board. You can see it was in our ladieswear, our menswear and our kids areas, in what we call other. But that's bigger, cellular, cosmetics, the Office land in South Africa, Truworths Jewelry, Loads of Living, even seeing all of them together, on average, dropped in sales. Identity was negative by 3%. And even YDE dropped. So it was a very tough year. And obviously, we never expected it to be as tough as that. And you can see the mix of our sales in our business, where the Ladieswear is about 36%, Men's is 25%, Identity, 15%, and others got bigger and bigger, it's now 14%. There wasn't a lot of store changes. There was 8 new net stores. But space is roughly the same, it's a little bit growth. So not a lot of store movement in the last year. And then the sales per square meter has only increased by 2.2% over the last 3 years. So although the sales per meter, our density is unusually high by South African standards in the clothing retailers, it has not been increasing. It's all part of the same discussion. It's all about the top line. And I mentioned earlier on this balancing act that we have to pay with trying to keep it differential in merchandise without becoming too expensive for our customer. And that is a difficult one. So Sarah will talk about that later on. But other than the unusually high depreciation of rand periods in 2017, 2023, we have been managing to keep inflation relatively low. And this last year, it wasn't bad either. But there are moves afoot to either keep prices lower or improve the quality and offering and product component, while not increasing prices. So there's a lot of work that's going on behind the scenes there. And then as you see, our gross -- because we had a really disappointing winter season, our markdowns during the season were higher than they would normally have been. That caused us to drop below our ideal of 55% to 53.6% gross margin. I mentioned occupancy costs. They are 9%. And there, we described, if you exclude noncomparable stores, other occupancy costs increased actually by 4%. Rentals paid on a cash basis were increased by 5%. All other expenses are under really good control. The receivable costs, the ECL allowance changed a little bit but not much. And the charge-off performed better than we had anticipated. So the ECL allowance actually was decreased there. So total trade receivable costs actually dropped. Again, we see the same issue here with our profit before finance cost, EBITDA margin, operating margin, all under pressure. Yes, very acceptable numbers as a yardstick compared to competitors and compared to international competitors, but nevertheless declining. And it's almost exclusively because of the top line. Coming in the year ahead in Truworths. We just spent ZAR 220 million, the committed so far is ZAR 231 million, but you're going to see a little bit of early stages of we might spend a bit more than that this year. But definitely the year after, there's going to -- the year '26 to '27, we'll be quite a lot more aggressive because we have some more ambitious real estate plans for the following year. But this coming here, it's pretty static. And the distribution facility, we've finished paying it off now. So there's no more CapEx in that to talk of in that regard. And Truworths, despite the top line problems and all the rest of it, it still was a cash-generating business, ZAR 2 billion. All the dividends of the group were paid out of that cash generation. I know there's some talk about whether we should bring money back to buy back shares. That is being considered by the Board, especially with the dropping the share price. So there might be an opportunity there. And there's a possibility the Board will decide to revert to a buyback program. Having a quick look at Office. Nice numbers, 10% up in sales, 11% in EBITDA, 12% in profit before tax. The numbers are excellent. Noticed the numbers, EBITDA of GBP 75 million. It's become a really wonderful, successful business and with lots of runway. GP was 9% up. Profit before finance costs up by 12%. Not much change in numbers of stores trading space increased by 6.4%, but that's -- as most of you know, that we've been managing to use the existing space much better, and that's evidence of it. But as I said at the beginning of this presentation from about November onwards, even in the next 2 months, the non-like-for-like starts to increase. And then from November on, there's quite a lot of non like-for-like. And the number of new stores starts to pick up accordingly as well. So it's not as much space regaining as much as new stores starting to kick in. This is just all part of the turnaround in Office, this wonderful sales density. It is a shoe business. So you do get high value in small space, but these numbers are spectacular and it continues to do well in sales per meter. And the margin's been fine. It's a solid, steady margin, a good business. Other operating costs are increasing. Of course, a business that's expanding as aggressively as Office's, costs do come along with that. 11% was the biggest single one, other operating costs. But if you exclude foreign exchange losses, other operating costs only increased by 2%. The depreciation went up by 9%. The right-of-use assets increased 13% due to the net impairment reversal. And improvement costs have increased in the U.K., partially because of new store payroll and also the national minimum wage. So using ourselves thinking and approach to cost saving, we apply that in the U.K. equally in the same way as you do to South Africa. It's a little bit more difficult and especially because the business is growing. So we contain costs, but we don't get silly about it. And there you can see the results with a great trend in margins and EBITDA and EBITDA margin in Office. Store renovation, despite what I've been saying, is not going up by that much this year. Although, again, I have to say we spent ZAR 5.4 million, which was less than the ZAR 6.5 million the year before. And in this coming year, we've committed ZAR 6.4 million. I suspect it may be higher than that by the time we finish because there's so much in the melting pot at the moment. But that is the situation. We spent a lot of money in the first 2 years on remodeling existing stores. So as I say, more of that money is now being skewed towards new stores. And there is quite a lot of work going on the computer infrastructure and software upgrading in Office. Office, despite everything I've said about CapEx and expenses, Office still managed to direct GBP 39 million. So it's a wonderful feeling to have two businesses both even in tough times generating cash. Looking at the credit account management. I have already referred to the 53 and the 52, the last 2 quarters above 50. Good thing, good sign. But TransUnion say, despite an improving index score, the recovery remains fragile. Sorry, I did jump the slides there, but I'm going to just go back. So again, it's great. It's looking better. It's tentative. But it is 2 quarters in a row. So I'm hoping and praying that, that continues and that the credit market in South Africa remains above the 50, up to 55 over the next 4, 5, 6 or 7 quarters. That will be very, very good for Truworths. We've been working tirelessly over quite a long time now in -- aware of what we consider to be a tough economy and not euphoric about the future of the economy. So we've been very careful on the credit side. And this is quite interesting because it shows you that over the last 4 years, our goal to improve the balance health is really working because you can see the good balance growth, blue on the very right there, in all of the years has been getting better and better in terms of risk. So if you just look at our risk profile, we -- on our better risk, we are improving it and we are managing to contain the values in our bad risk quite nicely will bring them down. So the book is definitely improving in health. And we compare ourselves to our competitors. We obviously have access to our customers where they have balances with our competitors. We know that because we have that data. And then because we have that data and because we are so large, we have a couple of 3, 4 million active customers, but about 20 million customers who are on our books, we call them loyalty customers, they've applied for accounts, they still interact with us, we can quite easily have a look at what's going on in the marketplace. And this one is quite interesting because it shows you, if you look at the high risk, what's happening on balance on average with the competitor's high risk, this is a stress, its competitors with our customers. So I'm not in any way trying to tell you what competitors are doing in their own books with all of their customers. But to the extent that there is an overlap, which is significant, we can see what's happening to our customers with our competitors. And you can see that the gap on the high risk between us and our competitors in terms of the average installment was very small. The competitors until '23, the extent of installment was slightly higher than Truworths. But look how the gap has grown in '24 and '25. We've, if anything, brought it down, the installment for the high-risk customers. It's been our strategy. Is it a good strategy or a bad one? You'll have to form your view. And I suppose it's marathon, not a sprint. We'll only know in a few years' time. We've intentionally been constraining our high-risk customers and our average competitors with the customers that are overlapped have been radically increasing. So look how that gap has changed. When it comes to the medium and low risk, it's the other way around. There, the gap is pretty similar, but Truworths does have higher installments and our prices are more expensive. So you can understand that with the medium and high-risk -- low-risk customers, we offer more credit. And we've been constraining ourselves with the high-risk ones, which is a change for us since 2023, a gradual steady containment against competitors who have been, on average, much more aggressive with our customers. Number of applications, interesting. I mean it's pretty solid now. The mix keeps on changing the way we appeal to different customers to entice them to try and open account with us. We're sitting there with 23% were approved, risk approved. But there's always a lag between those who are approved versus those that actually come and open their accounts. And then of course, we keep on working on the ones who were approved but didn't come and open, but that number seems to be settling at a steady 22%, 23% and now somewhere between and 15% and 18% -- or 17% in terms of opened. That's versus number of applications. Again, it talks to us trying to be conservative. But what is interesting always to look at is the young people, I mean, 43% of those 5 million people or so who seem to apply with us every single year, 43% are 29 years or younger. And actually, 25% of them, 1 in 4 was under 24. Now obviously, they tend to be the poorer ones. They won't get settled in long-term work and they haven't got a good credit track record, but it speaks to the fact that they want to shop with us. And so of course, when they apply, we call them the loyalty customers and we permanently have a relationship with them, and we work on it a lot. And of course, many of them over time become customers. In terms of the health of the book, it's pretty static. I mean, active accounts able to purchase, so not in arrears, around 79%. We like it to be about 80% or so. It has been as high as 82%, 83% in amazing times, but 79%, 80% is sort of normal-ish. And overdue accounts, about 17%. All the other metrics are pretty in line with each other. Total receivable interest as a percentage of gross trade receivables dropped a bit, but we know that was related to interest rates. Truworths has got some strategic initiatives. I think what I'm going to do, Sarah, if you don't mind, would you talk to this quickly. And then I'll just put myself on mute.

Sure. Good afternoon, everybody. So looking at the buying and range building initiatives that we've got, a lot of this has been facilitated by some of the thinking around our distribution center. So we have the capabilities that Michael has mentioned there. But from a mainstream perspective, we're really focusing on some simplification within the mainstream emporium and range building and creation of clearer product statements. I think we often receive feedback that the Truworths emporium can be difficult to shop. And so we are focusing on volume statements of key fashion items. And of course, this is also impacting on our ability to drive better value in those items. So that is through higher volumes and, therefore, better economies of scale. It's important to mention that we're not dropping our quality on these items and we're maintaining our elevated quality standards. But it's the value equation that we're looking to improve. So you can see that the color statements on the deep products category consolidation. And then we've got excellent trend information from our fashion studio, which we've always had. But now we're really enhancing that with some AI analytics that we are overlaying, and this is improving our upfront trend identification. And this, we're able to channel in two directions through the supply chain, one, being through development further ahead of time with our international offshore suppliers, which is delivering some very nice results on fashion product. And then, of course, maintaining the use of our internal design center for its quick response capabilities and also fantastic product development capabilities.

Thank you, Sarah. I'm going to just talk to this a bit because I want to go quickly through it. But we've been working on improved allocation models, this part allocation you're all familiar with from the new distribution center. There was a delay. We were hoping by the winter season, for February, March, April, we would be using it fully. And as I say, it's probably only going to be 100% or 90% used by September, I would guess, about 40% to 45%, 50% at the moment. But the part allocation model really makes an enormous amount of sense. And I do hope that over the next 6 months for sure and years into the future, that's going to be a major benefit to us. The guys have been working for the last 18 months on a much more sophisticated replenishment system, which is not quite the same thing as part allocation, but it's complicated. I'm going to go into that. But they've made some great headway there. And that is about to be fully implemented in our business. And then they have used some quite sophisticated modeling to deal with that terrible problem that every fashion clothing retailer in the world has with trying to get the right sizes in the right stores with the right garments at the right time. It's a nightmare and it's a complication. We've always been quite proud of our size curve planning systems, but there's been a big project working on that the last 12 months or so, and that is being rolled out at the moment. And I think the major benefit from that will start happening from peak summer '25. So those are very important processes. And then the markdown one I've already mentioned to you. It's all about getting the same terminal stock at a lower cost of markdown irrespective of whether it's a good or bad product. So forgetting the fact that obviously, if you buy a good product, it will sell better, you won't need to mark it down. Assuming it's the same, but having a way of marking it down exactly at the right level and exactly at the right time. And I think we could well make some good progress there. Sarah and her team are working on with the real estate people and the designers on the Identity megastore, which is starting to look really good. We've got a couple of new Identities. It had a tough year Identity, but some of the new stores, and there only a few at the moment, but as they get rolled out, it looks quite exciting. There is a new experimental concept that I'm not going to tell you about yet. I'd rather not shout about from the rooftops until we've got something to show, but we're quite excited about a new concept we plan to launch in the next 6 to 9 months, maybe a little longer than that. And then there is a lot of work on -- this is a real estate opportunity and a brand one, taking some of our brands that are long established in our emporium, a big store, and creating specialty mini stores or mini emporiums separate or linked from the emporium. So we've got a brand called Fuel, another called Moskow, they're sort of street. So there's a plan to make a lot of headroom -- headway with those. They're doing well anyway, but to have some stand-alones, which we haven't done for a long time, that gives us real estate expansion opportunity. Daniel Hechter, great brand, been with us for 40 years or something, going nicely. But there's a new elevated Hechter China, Europe, which we are introducing and to have more elevated stand-alone stores as well as the emporium one, but the stand-alone side I'm focusing on. And then Ginger Mary, another one of our brands, which is an African-inspired fashion business that we've created out of nothing over the last 15 years. There is now an opportunity in our mind to roll that out as a concept, shoes, accessories, homewares and so on. So those 4 or so concept are all able to be expanded as we feel more ambitious about real estate and about things improving. And then they're working on ladies accessories and bags. And as everyone else is talking at the moment, the beauty segment is looking promising and thriving, and we are also very involved in it. The difference, though, is we want to maintain our elevated image. So we will tend to avoid very low-end brands because they don't reinforce the status of our business. But still, there is a lot of opportunity in beauty. So we're busy with that. And then the newer brands. This is a photo, so just to give you a feeling of Fuel that is in our stores, doing great street business, Fuel. And then -- so we're going to roll that out in quite a few stand-alone stores. And there's Moskow. You can look at the product and the picture, you can see the difference. But you can imagine the alignment between the Fuel and the Moskow and how those 2 stores could stand alongside one another. Remember, we already have these brands. We already sell this merchandise in our stores, but it's just being much more aggressive and having stand-alone concepts, which are -- you can obviously do much more with a stand-alone than you can within a department in a big store. So that's more of the Moskow. Then Daniel Hechter. Everyone knows Daniel Hechter. It's an aspirational, quite upmarket brand, but it's got like a steady, stable base in South African men's and ladies' shoes, accessories. A big part of our business in men's and ladies. But there's a new Daniel Hechter, if you want to call it that, which is more sophisticated, more upmarket in our Hechter Europe, calls it Hechter, not Daniel Hechter. And we want to introduce that into our Daniel Hechter. And we may -- and probably we'll have some stand-alone upmarket Hechter stores that offer an elevated product. So it is quite interesting because whereas the whole market is still about value and getting value, we are, if anything, going with street fashion and even upgrading to cater for more niche markets. That's a little bit more about the Hechter. There's some pictures of what the stores are looking like. There's some in China, there's some in Europe, just to give you a feeling for the level of sophistication. And then Ginger Mary, our in-house, developed it from scratch. It's a nice, big business for us now. Fashion, international global fashion but inspired with African sense, African themes. And we haven't introduced homewares before. We are going to, maybe fragrances, and again, stand-alone stores. And then we go into supply chain. There's a lot of initiatives there. I'm going to go quite quickly because I'm worried about the time, but there's a lot of work. Our DC, as I say, is already up and running, but it's going to be fully capacitized by September. There's also a lot of work on our customer predictive capability. Everyone is doing AI there and, of course, we also are. But when 70% of your customers shop in your own stores with your own card, and we know so much about them, it gives us an enormous advantage when you start interacting with that data. And we also are -- there's a serious lot of work going on with our digital offering at the moment. Our emporium reimagined, those stores are doing well, and I've already spoken about the stand-alone stores. These are just some photographs of the new Identity and the new Truworths. And this is the brand-new YDE at Canal Walk. Beautiful store, very different look, and it's doing very well since it opened. In the Office U.K., that you sort of know about, the real estate expansion, modernization, 13 projects have been approved, and there are several others and a lot of others who are being evaluated at the moment to all open within the next 12 to 18 months at most. And then Offspring, we opened a new store in Camden. It's not a new store, it's an old store, but we remodeled it completely, and in Kings Cross. Kings Cross about 1.5 years ago, 2 years, Camden a few weeks ago. They're doing fantastically. So it shows there's runway separately from Office for Offspring. And bear in mind, our 2 bigger stores are in Offspring Southridges, ladies and men. That's what the new office in Bluewater looks like. Trafford. This is -- the guys are really proud of this. Adidas did a massive collaboration with us in Oxford Street last week, I think it was. They're just launching the new superstore and they asked us to partner with them. And that shows the special relationship that the guys have with dealers and with the big brands. And we were the partner for the launch of the new superstore. Both Office and Offspring have now apps and both are going nicely, especially the Office one. And the champion challenger methodology in Truworths that is so well established is now on a fast track in the U.K. Working on the DC, working on systems in Office, same thing. I'm not going to talk much about environment -- social and environmental issues other than to talk again about we follow these 7 good practices of the United Nations Sustainable Development Goals. We've got a couple of hundred million in our charitable causes, and we do enormous amount of work. More of that information is available for those who are interested in sustainability and charity. You can see that on our website. There is a lot of work going on, on non-exec rotation. Nine new non-execs have been appointed over the past 7 years, and that's continuing that process. And we are making every year more and more good progress with our B-BBEE score. I think we are at Level 4 now, and it's going well. And then for the 18th consecutive year, we have been ranked in the top 10 of the E&Y Excellence in Integrated Reporting Award. We're the only company by miles who has achieved that. And I'm not talking about retail or something, but any company in the Johannesburg Stock Exchange. And we know that -- we've been informed we're on the top 10 again this year. So outlook, I'd like to say almost -- I don't want to say it because I think I say it too often, but we're starting to feel again more optimistic because there's a lot of work going on behind the scenes. And if the economy does pick up a bit and if this credit stabilizes and the U.K. carries on as it is, we are hoping for a much better performance in the next 12 months and thereafter than this very disappointing past year. I'm not going to repeat what I've already said. But you can read this at your own time. And I'm now going to go to questions. So I'm going to stop sharing, and I'm going to read the questions. I've got lots of questions here. I'm very much aware of the fact that we'll never finish all of these questions in the short time we've got left. So I repeat, with pleasure, send us questions to our Investor Relations address. And the team of us, the people you're seeing here and a few others are involved, and we do respond to those questions really quickly.

So this first one is thanks for the presentation. Three questions. One, Office. We shared reported sales growth for 7 weeks. How is the like-for-like sales growth doing at the moment? A U.K. peer reported intensifying competition and rising promotional activity in the U.K. And a question for Michael, what do you think the midterm earnings path will look like for Truworths if the recovery in South Africa continues? And do I think there's more strategic changes needed, and what could that look like? So there are three questions. Why I like answering that is because they cover, when I glanced through it, many of the others. The like-for-like component in Office growth is -- we don't disclose that number, but it's above 0 but it's not very high. It's a couple of percent. We try and push it to -- in good times, when you've got a brand that's getting crazy and we can get all the stock, then you try and push it to 3%, 4% or 5%, but it's a bit lower than that when you can't do that. So like-for-like is not brilliant at the moment in the U.K., but it hasn't been for quite some time. The growth we're getting is out of our remodeled stores. But of course, when you get a big brand flying, that does well. And also, we -- our new stores are very successful. The -- are you intensifying competition and rising promotional activity? Yes, our team in the U.K. does talk about a lot of promotional activity in the U.K., and I'm sure that is the case. One's just got to beat your competitor. And I really feel in the U.K. that niche that we've got gives us a big advantage. And what I think the recovery will be like in Truworths over the next 6 months if things turn around? Well, remember, our base is now quite low for the summer and winter. And I've shown you our thinking about some of the fine-tuning we are doing with the way we distribute our merchandise, the way we buy it, the mix of sizes and the expected results. So there should be -- if the economy picks up, there should be a comfortable improvement over the next -- over this coming year, the year we're in. And yes, do we need strategic change? For sure, but it's complicated. We can't make Truworths into a value retailer. It's impossible. You can't be what you're not. So we're doing all the things that I've mentioned in this presentation and many more. That is our strategy, to try and emphasize a point of difference while not being ridiculous about price. There's a question about the market share. What is Truworths' Africa same-store sales growth in '24 and '25? Reon, we don't disclose that, I don't think.

No, Michael. We don't disclose that.

I don't think -- but remembering that we don't have tons of new -- I mean, because there's 800-and-some stores in South Africa, irrespective of what we do with renovation and that the proportion of new is small. When I look at it compared to the U.K., it's massively different. So it's very similar to total. Now there's some -- one question here, Reon, you could answer this, maybe Manny. I would like to understand why financial year '24 pro forma numbers have been restated.

Manny, are you going?

Yes, I can answer that. They haven't been restated. We don't restate the pro formas. The pro formas are essentially calculated by taking once-off noncomparable items from one year to the other. So one could have -- for example, we had a trademark -- a reversal of a trademark impairment of around about GBP 44 million. So we exclude that. There might be some big insurance claim that happens in one of the comparable years. So we exclude that. And we really do this to try and make you understand the fundamental performance of the Truworths business without the once-offs. So they change from year to year and it's not a restatement. It depends what happens in the prior years where we're comparing the 2 years.

Anything more you want to say, Reon?

No, I agree. That's perfect. Thank you, Michael.