Despite recovering from the lows seen during the COVID-19 epidemic, Truworths International shares remain lower than the high reached in 2013, 2016, and 2018.
Over the last decade, from 1 July 2015 to 30 June 2024, the company’s shares have increased by only 7%.
In comparison, the Johannesburg Stock Exchange (JSE) Top 40 returned an average annual return of 8.76 percent during the same period, for a total return of well over 100 percent when compounded.
Truworths International’s market capitalisation has increased minimally, from R36 billion ($2 billion) in July 2015 to R38 billion ($2.2 billion) now.
While the group’s headline profits per share (HEPS) have increased by 38% between FY2015 and FY2024, share buybacks have played a significant role in this expansion.
The corporation has consistently used extra capital to repurchase and cancel shares on the open market, lowering the weighted average number of shares from 416 million in 2015 to 371 million in 2024, a 24 percent decline.
This strategy has grown HEPS and dividends per share from 405 cents in FY2015 to 529 cents in FY2024, representing a 30% increase. However, much of this rise is due to a reduction in the number of shares in issue, rather than organic growth. Truworths has given shareholders a total of R43 in gross dividends over the last ten years, minus dividend withholding tax, which is over half of the current share price.
Despite this small growth, CEO Michael Mark has been quite well compensated.
Over ten fiscal years, he got a total of R206.6 million ($11.7 million) in guaranteed pay, benefits, and short-term incentives, disregarding the amount of any long-term incentives issued. Mark’s basic income rose by 76% throughout the decade, from R6.4 million ($363,317) to R11.321 million ($642,673).
In the fiscal year 2023, his short-term incentives totaled over R13 million ($737,994), up from R7.8 million ($442.796) the previous year. These incentives are linked to performance objectives such as adjusted HEPS growth, return on assets, return on equity, and gross margin, which together account for 70% of the weighting. The remaining 30% is based on strategic aims.
In addition, Mark profited from interest-free loans given under the group’s 1998 share scheme, earning between R2 million ($113,542) and R3 million ($170,313) per year in lieu of interest.
As of June 2023, he has R43 million ($24.5 million) in loans through this arrangement. The group reports that all outstanding debts were returned by the end of June 2024.