// Truworths mulls closing down 15 loss-making UK Office stores in the next 2 years
// An overhaul of the remainder of the footwear retailer is expected to boost sales and profits
// Office had appointed restructuring advisers in early July to assess its financial position
Up to 15 loss-making Office stores have been earmarked for closure by parent company Truworths as part of a wider turnaround strategy.
Last week, Truworths chief executive Michael Mark told analysts that the group expects to close up to 15 of roughly 139 Office stores in the next two years as their leases come to an end.
It is not yet known how many employees would be affected by the closures.
He added that more closures could possibly follow, along with three concessions that were “problematic”.
Meanwhile, an overhaul of the remainder of Office’s store estate is expected to boost sales and profits.
Mark also said there would be a continuing focus on inventory management with the aim of arresting a decline in gross profit margins, and expanding and growing Office’s ecommerce.
The news comes after the footwear retailer reportedly hired specialists from Alvarez & Marsal to assess the business and consider its options back in early July.
The £250 million Office acquisition in December 2015 was Truworths’ first foray into Europe as the company looked to diversify from its home market in South Africa.
However, Mark conceded that the acquisition of the British footwear retailer had proved a poor investment so far.
“We got our timing unfortunately very wrong,” he told analysts.
According to its trading update published last Thursday, Office swung to an operating loss of £94.7 million in the year to June 30.
This was driven by an impairment charge of £97 million.
Office also suffered from House of Fraser’s administration, as it was owed £700,000 by the department store for trading in its concessions there.
Online sales rose 10 per cent but retail sales inched up just one per cent to £279 million.
Meanwhile, Truworth’s overall group profit before tax tumbled 57.5 per cent.