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Bonds News

UPDATE 1-South Africa's Truworths provides $8.6 mln funding to Office

* Office funding taken from existing group cash reserves

* Full-year HEPS down 28.2%

* Co swings to trading loss of 1.3 bln rand due to impairments (Recasts lead paragraph and headline with Office funding)

JOHANNESBURG, Sept 3 (Reuters) - South African retailer Truworths International Ltd said on Thursday it will advance funding of 6.5 million pounds ($8.62 million) to its British footwear unit Office as part of a rescue plan.

The group as a whole, which sells clothes, jewellery and homeware, as well as shoes, has been hit by the impact of the COVID-19 pandemic and store closures because of lockdowns.

On Thursday, it said its headline earnings per share, South Africa’s most closely-watched profit figure, fell by 28.2% in the year to June 28.

The pandemic impact forced Truworths to consider restructuring plans for Office that include redundancies and renegotiating store leases.

It said the fresh funding will be taken from existing group cash reserves in a phased manner over the next 15 months and will take the form of a secured revolving credit facility to Office Holdings Ltd.

“The store portfolio remains a key focus point and management continues to engage with landlords on lease negotiations. Loss-making and marginal stores will be closed as leases come to an end,” Truworths said referring to Office.

Group retail sales fell by 9.2% to 16.9 billion rand ($1.01 billion) after Truworths was unable to trade from stores or online in South Africa for five weeks, while debt collection from shoppers who buy on credit fell significantly.

Credit sales of the Truworths Africa business comprise 70% of retail sales in that unit.

In the United Kingdom, the company was allowed to continue selling products online but the 8.8% growth in online sales was not enough to prevent a 16.4% decline in sales there.

Impairments totalling $165.28 million swung the company to a trading loss of 1.3 billion rand from a profit of 459 million rand.

Truworths declared a final dividend of 31 South African cents per share, down from 135 cents after saying in May it was unlikely to declare one. ($1 = 0.7537 pounds) ($1 = 16.7806 rand) (Reporting by Nqobile Dludla; Editing by Susan Fenton and Barbara Lewis)

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