Good afternoon, everybody. Welcome to the 2026 February half year results presentation of Truworths. In the room with me, on virtual is Mannie Cristaudo and Sarah Proudfoot, who are our Joint Deputy CEOs. You all know them pretty well. Then there's Reon Smit, who's our Financial Director. I'm gonna go through the presentation as speedily as I can, because it will be published on the internet in the next hour or two afterwards anyway. So that I can try and get to the questions and answer stage within 35 minutes or so, and then we've got at least 20, 25 minutes until 2:00 P.M. to answer questions.
You know, we have obviously read some of the initial analyst reports that came out this morning and yesterday, so we've tried to even include those responses in those, in our presentation. It follows our normal agenda. First and foremost, I'm going to talk once again about our business philosophy. This is not to annoy you or bore you. It's because I'm trying to give you a filter of how we think. This filter affects our interactions with shareholders as well, because when you give us input, whether it's positive input or critical input, we don't ignore it. We don't just blindly follow it. We filter it through our philosophy every single time, 'cause that's how we think.
I'm trying to explain to you how we think, and essentially it's a simple thing, especially for the new shareholders. I've said it many times before, we publish it. We don't even mind publishing it because we think, well, if our competitors saw it wouldn't matter because you can't copy someone else's DNA. You don't wanna be someone else, you have to be yourself.
This is us, this is what we are. We say that we have three pillars to our business philosophy through which we filter every single thing we do, including feedback to and from shareholders. The first one is the purpose. Why do we exist? The way we ask ourselves that question, we say, "Well, if tomorrow Truworths didn't exist, instantly, the very first minute it didn't exist, or t he same for Office, then what gap will arise in that environment?" That's really what we say, and then we talk about how we achieve and fill that gap. That's what our external purpose is, as simple as that.
Our value system is, how do we internally interact with each other? Priority-wise, it means the first and foremost thing is innovation and passion, and then contribution-orientated. Now, what do we mean? We mean when we recruit someone or when we promote someone, or when we deal with anybody in our business, we always think first, not about how much do they want to earn or how much do we pay them, which you'll see is part of the outer circle, or whether they like to work in teams. That's also important, but it's part of the outer circle.
It's more to do with the fact that we first and foremost need to know are they innovative and passionate? Secondly, are they contribution-oriented? Do they contribute more than they consume, and do they contribute before they consume? We think like that. We've got these two sort of pillars. One is, what role do we have in our societies? Two, how do we govern ourselves? Now, the more important part for you is, how we judge whether or not we're doing it well or badly, is we say, "What do we think our stakeholders would say if we were doing it properly?" For customers, you can go and ask them because you can see how they shop with us. We do surveys all the time. For staff, it's also quite easy.
You go and do surveys, you talk to them, and you see exit interviews. For shareholders, it's also not hard to see how they speak about you because they tell you. Shareholders publish reports, they talk to the press, and they tell us face to face. It's not hard to get to know what they say. What our strategy is, which changes all the time, we're permanently changing strategy, is how do we get the difference between customers, staff, and shareholders, what they say, but compared to what we wish they would say, which is the vision of what we wish they would say, how do we get them aligned? Our strategy is to realign them, bearing in mind, hardly ever are they aligned. I mean, you never say there's perfection.
Shareholders, customers, staff, they all say exactly what we want. Then there's government. It doesn't work like that. They always say different things. Then we've got to have a strategy for dealing with it. Do we believe them? Do we want to change it? Do we want to change our strategy to deal with it, or do we communicate differently? You know, that, those are our strategic imperatives. All I'm trying to explain about this is that's our filter when we get communication to or from shareholders, customers, or staff. Our filter is this business philosophy, and it's important for you to know that. Yeah, when you look at it, going to that filter, we try and say we are long-term.
We want shareholders to say, "We are long-term investors in Truworths 'cause we trust in management capacity to execute strategies which are innovative and which deliver significant value over time." Sometimes they do say that, and some always say it, but some say the opposite. "Management's too old and, stuck in their ways. Company isn't moving forward. Don't they get it? You should be in the value space." Obviously, we don't ignore those things, but we filter it through our business philosophy, and then we debate it. Do we need to change strategy? Or even in the extreme, is there something wrong with our business philosophy? And then we decide one way or another, obviously in consultation with the board and management, and that really is our process. I'm not debating the issue itself, I'm explaining the process to you.
We remain true to that business philosophy. We stick to it, and we are committed to it. That does not mean we don't change strategy. It means we don't change the business philosophy too easily, but the strategy, we always are changing. We are geographically diversified well now in South Africa and the U.K. That, as you know, has been intentional, and it's going well. Always have been and always will be, as long as this management team is in place, and I think this board, strong cash generative in both businesses. We do not think in the, in the, in the sort of risk international macro environment that is so volatile, permanently volatile. Sometimes it's good, sometimes bad, one other, one good. We always believe that you better have a strong balance sheet. That is our fundamental mantra.
Even when we bought Office, we said, "Will we be able to pay the debt off in two to three years?" That was critical to us. We think like that all the time. Some of you call it a lazy balance sheet, we call it good retailing. Again, it's our business philosophy. We generated more than ZAR 1 billion cash, as we sort of always do every six months. Since, it's just interesting to note this, that we bought back ZAR 750 million worth of shares in the last period, since 2020, we bought back ZAR 3.2 billion worth of shares. I think that's about 14% of the company, something like that.
There is a question I've already seen about how much more we're gonna buy back. I don't think I'm gonna tell you that. I will tell you that every quarter, our board looks at our solvency and our cash flow for the next 18 months. We get a mandate from them every quarter, and we update it. Every single board meeting, we update it. We form a view with them. It's a very clear mandate. Then we implement it. When we do it, just so you know, I'm happy to tell you the methodology as opposed to the quantum. What we do is we feed it through the buyback over time because we don't want to influence the share price.
We'll never buy more than, I don't know what the figure is, maybe 15% of a volume in that day, and never more than the volume average weighted price for the day. We might feed it through over a month or two or three because we try to do it gradually over time, but always within the board's mandate and always with a very clear focus on the cash flow. We may. Actually, the board and we might take a more positive view when we think the business is particularly undervalued. We did do that after COVID because we could see that there was a fundamental misunderstanding. We explained everything to shareholders very transparently, but then we decided, well, there's still an opportunity, and we were aggressive. In another moment, we might be less so.
We manage it. Similarly, when our cash was under a bit of pressure because of the D.C. being built over the last four, five or three, four years, we were a bit more conservative, but still, we spent ZAR 750 million. We have stuck to this dividend cover of 1.5 times for 12 years now, without an exception. Even during COVID, we sort of... We didn't say, "Well, careful, it's COVID. We're not gonna pay the dividend." We were one of the fewer companies, I think, that stuck to our dividend policy. And our 10-year average dividend yield, that can talk to dividend, cash flow, as well as, I suppose, the valuation of the company.
It's been 6.7%. Over the 10-year period, we just decided to look at that number. We don't normally, we did. We have paid dividends of ZAR 17 billion. If you add that together with the share buybacks, it's probably over ZAR 24 million or ZAR 25 million over 10 years. We are generating cash. The focus in 2026, we have these focuses every year, sort of a themes for our business. One year, a couple of years ago, it was opportunity in adversity. There is adversity, general adversarial circumstances. What's the opportunity? We do think like that. This year, happy to tell you might like it or not. I would think you like it. It's accelerate, with discipline. We all know, I mean, it's not hard to know. It's a great business.
It generates cash, strong balance sheet, great brands in two continents, well-run, but Truworths Africa top line is a challenge, and Office could become one in the future. What are we gonna do there? We talk about accelerate while maintaining all the business philosophy disciplines that you know we are well known for. The issue in our business is obvious. Everyone knows it. You know it, but, I mean, I don't want you to think we don't know it. The obvious thing is that we have to get the top line, within reason, going as much as we can, especially in Truworths Africa, but also in Office. We're doing a lot of things organically in Truworths. I mean, essentially, our business is an organic growth one. We have made acquisitions over many years.
We do believe in acquisitions, but it's within the constraint of the business philosophy and what our capabilities are. We're not a business that believes in a decentralized, sort of, a massive decentralized, business. We don't think like that. We're not saying others are wrong if they do. We don't think like that. We think, how can we manage it properly? How can we make sure that if we are responsible for the asset, we can intervene actively, especially when it's not doing well? We think like that. Therefore, acquisitions have to be strongly aligned with our capabilities, number one, and two, our business philosophy. Therefore, you're dependent on organic growth when you think like that, and you can see what we're doing, very aggressive growth in real estate, in Office. Why?
It's working, and on the Truworths side, we've got to be innovative with our brands, with our merchandise, with our thinking in this environment, and we are on a mission at the moment, a real mission, to really accelerate our growth on top line, especially in Truworths Africa. Our new D.C. is working well now, and there's tons of capability that comes with that, but that's not all. It's really about the innovation in the merchandise, the way we think about our merchandise and our offering. Credit, we tried to do some novel things in the credit industry that the market is complicated. There's credit cards, there's our own in-house credit, there's debit cards, there's Buy Now, Pay Later. There's so much going on in the credit market and industry.
We have to make sure in our credit environment, we are right up there with the best of them, with the best form of credit packages and menu to offer the customers, but also our communication and the method of our communication and style has to be top-notch. Retail trading space, that goes without saying. In Truworths, there are things happening there, but the percentage is always gonna be 1.5% in good times, maybe two, but it's very hard when you've got sort of 850 stores in a country like South Africa to sort of add real estate in percentage terms that's significant. Office is the opposite. We get back to the same old thing, which is it has to be organic and acquisitions that are aligned.
E-commerce growth has been fantastic. In Office, it's stable, great at 45% or so of sales. In Truworths, I think it's over seven now from two, not even three or four years ago. It's a very fast-growing area. In South Africa, the customers do like to shop in malls, but the e-commerce opportunity is excellent, we sort of have a one-dimensional, two-dimensional. We link the two together. One customer, but with lots of multiple methods of shopping with us, one critical one being e-commerce. Of course, the other one's stores. We are making great headway there, I think. In Truworths' case, Well, Truworths and Office, we basically run the two, e-commerce in Office and Truworths, as if they're one.
Two different teams, work together, almost hand in hand, we enjoy working like that, we know the Office people do, too. The Office and Truworths, really two continents, a similar thinking, albeit two different markets, two different groups of customers, quite a lot different product, aligned. Invest in Office, clear. Store remodeling, new stores. We bought the D.C. Why did we buy it? We've been asked a few questions. Why did we buy it? It was a couple of million GBP. It was because, you know, we're there. We're in Kilmarnock. It's, there's nothing much else in Kilmarnock. For us, it's in Scotland. It's been there for a long, long time. The landlord was wanting to sell. It wasn't good for us to be in other people's hands.
The money, Office could accommodate. I think the cash flow it's generated in is about two months or something. We decided it's a strategically a good thing to do. By the way, that came with IFRS 16 implications, which is some of the questions, why is there such a big IFRS 16 other income gain in Office? It's because of that. There's a impairment that we've created over time, IFRS 16 comes in there, foreign exchange. There are issues with foreign exchange changes, those two things are the income in Office. There's a big project in Office at the moment with the IT environment, because we are trying to catch up as quickly as we can with Truworths, there's a lot of focus on our own made-to-order range, our own branded shoes in Office.
It used to be a much higher percentage than it is nowadays. Last two years has been growing nicely, margins higher. There's a limit to how far we want it to grow, but it's going well at the moment, and maybe Sarah will talk to it later. The strength of e-commerce in Office is undeniable. I just want to move my screen around here because it's blocking. This is the group. You're gonna see these figures. You've already seen them, and you're gonna get the presentation anyway. The main thing I'm we're highlighting at the bottom right there is that 14.4% down in cash generation. That's related to the timing. The true change on last year is 2% up in cash generation.
In the period, it's a significant amount of money. As you can see, ZAR 2.8 billion. Gross margin in the group, steady on last year. We still haven't quite got back to the 53.5%, which is group. Truworths is higher, as you know. Office is a bit lower. My guess, it's very hard to do, 'cause the questions are gonna come again about it. My guess is that Truworths will slowly keep on improving gross margin back to its historical norm. Not fast, but slowly. Office will probably be stable at a slightly lower figure for a year or so, I'm guessing, in the tough climate it operates. On average, it might be like this with slight improvements as Truworths improves itself. That goes to other metrics, too.
You know, when we look at return on assets, return on equity, asset turnover, we sort of getting to normalization now. I mean, I can see return on equity has dropped from 56 at a high to 34, but if you take out the impairment, the unwinding of COVID, the share buyback, this level that it's got, which is somewhere between 31 and 34-35 on return on equity, I'm really well, let's say this: we'll be disappointed if we can't stay within that range. The same applies to return on assets. A return on assets of in the mid-20s upwards, that should be our norm. We run a business, remember, we don't think, "How do we gain market share on at any cost?" I know that is another strategy.
Some of you believe in it, Read our business philosophy. We don't. We generate cash, and we want these returns to be stable at these levels. Our balance sheet, therefore, remains very strong, as you can see and as you already know. Inventories are a small amount, 5%. That's mainly Office. Truworths' inventories are not a problem in that way, but I'm not saying it's a problem in Office. That's due to Office expansion. There's a very healthy balance sheet. I've told you about share buybacks already. This is a little bit more vision into it. We have bought back 65 million shares since January. The average price was ZAR 49.60. The dividends you know about. We've got an Asia facility, which we talk about at the bottom right there.
That's just to make you understand and be clear, which I'm sure you do know, but we want to point it out, that not only are we very cash generative and a strong balance sheet, we also have a facility that's a great amount of headroom. If you, if you look at the net cash we would've had in the group, it's about ZAR 1.1 billion. The true figure for the six-month period. Group generated about ZAR 2 billion, but then we had share buybacks, paid dividends, etc. The letter tells you how it worked from a group point of view. Looking at Truworths Africa, which is, as I said before, Truworths Africa is actually hard to do what we want, but not hard to understand.
The expenses are great, the cash flow is great, the brand's good, strong management, great systems, how do we get the top line to move? That is our challenge, without sacrificing margin. That is our challenge, these numbers reflect it. The margins, everything's good, the top line has caused a problem for Truworths Africa. There you can see it, that the top line was down by 3%, as was the gross. The expenses, we managed to contain at -2%, trade receivable cost was a big help there. You can see all of our expenses, we managed very well. You all know, you're all analytically inclined, if your top line doesn't work, you can't do this forever as your solution.
We have to solve this problem, even though we understand it's a tough economy, it's constrained, so we are very aware of that. Whether we are successful in fixing it, we'll only know in future, but I can assure you, it's not like we're blind to it. We know. You can see from this, that I mean, remember, we've probably got a couple of hundred buyers, planners, more than a couple of hundred. It's a good few hundred in both businesses, and forecasters and trend experts, and yet, and they. It's such a big business, many of them don't even know each other. I mean, it's not like they sit and share, and everything's done the same.
They all have their own strategies and their own DNAs and their own direction, and there are central activities that manage it, but they're sort of encouraged to differentiate, if you think about it. Yet, it was across the board, the toughness. From Identity, which isn't even in the Emporium. YDE, which has got nothing to do with Emporium. Truworths Kids, Truworths Menswear, Ladies Wear. Even in Menswear and Ladies Wear, there might be 10, 15, 20 teams in each. I'm pointing out it would be easier to say that, "Oh, everything's great, but Menswear has been a problem. We're gonna focus on that." It's more a bigger picture issue about how it was across the board. We have highlighted there that ladies is about 1/3 , men's is about a quarter of our business. Kids has grown a lot.
Identity is about 16%. Other is getting bigger. A big part of other is our Office London in South Africa. I mean, all of them, Loads of Living, Jewellery, Cellular, they're all doing quite well. Sync's there, but it's small, and it's gonna be incorporated into Identity in the future. Office London's a nice growing business. It's got limitations from a brand supply point of view, increasingly, reputationally from Office UK, even the way we're running it and its sort of strong positioning and great results in South Africa, it's a growing business. In Truworths, closed 31 stores, opened 22. A lot of that is movement of stores and making sure the real estate, the assets, sweated as much as we can. We do a lot of that. As you see, we've got 812 stores.
The density, whilst good by international, especially South African standards, it has been declining from 40,000 to 35,000 and off. Yes, the 40 was extreme. I suppose you could draw a line from 2017 onwards. Then we're static. I mean, there's been inflation. Again, we're really talking here about top line. It's true we could cut the real estate and make our real estate smaller. We're very careful with that. You know, real estate is hard to come by. We are already in A-plus positions in pretty much every place of South Africa. You don't wanna give up great real estate. We do consolidate. We've got small stores, albeit in great real estate. We can incorporate them into an Emporium or add 2 or 3 small stores together.
For sure, we do that. Nevertheless, top line is the only thing that will fix that. Inflation, you know, we had that hectic period in 2022 to 2024, and now inflation's been very low. You notice there's a bit of an uptick there. That's not because the rand isn't strong. You all know the rand's strong, and of course, that's good for inflation. We have a strategic goal and a plan going on behind the scenes where I told you we're doing organic growth. Organic growth means merchandise. Our merchandise, we are elevating. Interestingly, we are actually putting better products, smarter products, higher quality product, which is dealing with the negative inflation from the strong rand with positive, better merchandise, which is even more differentiated from our competitors.
That's what we were anticipating, a bit of inflation, 2%-3%. Truworths Africa gross margin slightly up 0.4%, and as I said earlier on, every half year or so a year, we try and tweak that up a bit to try and get back to the 56%, 55.5%, 56%. In Truworths, stock turns a little lower. We will try and fix it. Tough times gives you lower stock turn and higher mark down. I mean, obviously, we manage our stock a hell of a well, but, you know, if you're missing your sales plans... We don't plan minus sales growth, we plan positive sales growth. We plan more than double digits, well, double digits if we can. We don't think, well, let's plan minus. We don't. Of course, there are consequences.
No matter how well you manage, there's gonna be overstock. You have to manage that very carefully. Expenses were, if you excluded foreign exchange losses, their trading expenses were actually down by 3%. I'm not gonna go through this. You'll see it afterwards. The trade receivable cost, let me focus two seconds on that, 10% down. We're proud of that, and that's quite an important measure for you because the ZAR 82 million ECL movement is a good thing. I mean, it because really, that one is extraordinarily scientifically managed. There's no game playing or... That is really the ECL allowance, what it should be, and that means there is a mild improvement. It's not radical, but it's mild.
I have been saying that for at least a year and a half, I think, and that's the truth. These things do not change suddenly, but it's very good to be able to say there's a steady and mild improvement that we think will continue. That's how we think. You know, the margins are great, but with top-line pressure. CapEx, the DC is fully built now. Last year, we spent the last ZAR 150 million. Now it's just maintenance. Although we are gonna buy some extra land we are allowed to buy alongside our D.C. The money is not significant, but next year we'll put it in. We're only doing it next year, and that will be the last sort of investment we make. That is for strategically for future. Store renovation in Truworths, ZAR 124 million.
Last was 134. There's another 50 to go. We managed that. We don't need to spend a ton more. Computer infrastructure, we manage that carefully. There's not a lot going on there. Cash flow, Truworths, extremely great cash generator business, ZAR 2.1 billion. It's a cash-generating machine. That and Office, the two of them are cash-generating machines. I mean, they're the cash realization rate, 99%. You're not gonna get much better than that. Office UK, margins all pretty good. Profit before tax growth of 10%. Admittedly, though, it only increased by 2% if you extract the IFRS 16 gains on lease modifications and foreign exchange. Office did have a bit of a challenging last few months. The U.K. environment is tough.
I mean, we don't want to kid about that. That's true. Our new stores, and when I say new, a lot of it's remodeled. Remodeled and new stores are fantastic. Every one of you, if you saw the ROI after tax of each decision, you would want to do it. I can assure you it's significantly better than the weighted average cost of capital by investment. By the way, that includes the Kilmarnock warehouse. We do that, and we think like that, and it's much easier to get that than we are able to in South Africa. That's why we are so aggressive. Nevertheless, there is a tough market out there, and the like for like is not that easy at the moment in Office. Are we positive?
Part of the problem, and I'll say it quickly now, because there are obviously gonna be questions. Part of the problem really is macro in the U.K., but the other one is some of the biggest brands are battling at the moment. You know that because you see, international reports from the biggest brands in the world. Those brands, which are the sort of mainstay of the business, are not doing quite as well. There are green shoots in each of them, and then below them, there are lots of other brands, and good ones, that are doing a hell of a well, but they don't make up for the tough ones. We're starting to feel quite positive about some of the tough ones are having a tough time, so we'll see. Over the next six months, it will be interesting.
Office grew by 10%, you know all that. It opened five new stores, closed one. That is gonna escalate because there are quite a lot coming up. I mean, again, a lot of what happens in Office is a new store comes up, but that's really an existing store that gets bigger or we rework it. Mainly that. There are some new stores, there are quite a few coming in the future, there's a lot of real estate work in the future in Office. What I've just said accounts for why, although we've got a fantastic sales per meter in the U.K., it has not grown in the last two years. Gross profit trend, very good in Office, I suspect the drop from 48.2%- 48% might even come down a bit. I'm not sure, though.
It's really hard to tell 'cause MKO is growing, and we might manage the stock even better. I, my guess is you might have a slight downgrade in Office like it is there a bit more in the future. Next year, I'm not sure. Truworths on the hand is gonna be slightly better. You work it out from there yourselves. Office trading expenses also well controlled. Most of this extra is because of the new stores. I'm rushing a bit because I'm aware of the time constraints. I know you're gonna ask questions. I also know we'll see many of you the next 3 weeks. Office profit is very good. Margins are great. It's a great business. That IFRS 16 thing you know about, there's the store innovation.
There we spent GBP 4.5 million on the D.C. It's not a massive amount of money, but it was strategically, for sure, the right decision, so it would have been silly not to do it. Bear in mind, we even had the impairment that we could reverse now, but that's not the reason. We bought it strategically. It's the right decision to invest in it now, look after it, and it's gonna be ours for a long time, so why not? Projected, there's another GBP 6 million in stores, so we're spending about GBP 12 million in stores in the U.K. As I said, if you could see the numbers, you'd want us to. There's the cash generation. Great business, just like Truworths, cash-generating machine. Realization rate, 112%, last year, 111%.
Account management credit, TransUnion, quarter 24, 25. I mean what? I think that's 18 months, Manny. It's 52%. 52, I mean. That means that's slightly positive, which is a good sign, but that actually is reflected in our book. It's slightly better, but not crazy better, but it's consistent, and it's been for long. That's a good thing, but it's not remarkable yet. The book quality summary: book quality is stable, improving. Millions of applications we still get from young people. I don't know if I skipped something here. No, I didn't. Millions of applications from young people. There's a higher opening rate. There's a good growth of good balances, improved customer engagement, and we've got some new credit products offering coming. This is one I thought I'd skipped out. It comes afterwards.
This is where we approve 100 accounts, let's say, because 100 apply, should I say. We approve, let's say, 25 of them on average. In this case, it was 29. We're getting better at slicing and dicing, and then there's a big gap for some reason between what's approved or actually come and open. That has gone up to one of the highs in the last 5 years, about 18% now. That gap of the 11 is something we're continuously working on. As you can see, 18 out of 100 is not a bad number, especially when we're getting tons of applications. There you are. It is a bit down, but that's because we're being clever about who we are enticing to open new accounts.
I mean, we're talking about two million, 2.5 million young people who are trying to open accounts with us every year. By the way, when every 6 months, and when we don't open, they automatically become loyalty members, and we continuously work on that group. It's a very positive group. Here you can see that it's about 23% or less than 24 and another 18%. It's about over 40% are under 29 years old. 41, it says there. Trade receivable stats, the main thing is to show the ECL is getting slightly better, and the accounts opened as a percentage of who apply is higher. This is an interesting one. You know, we obviously... These are our stress now. I want to make a point. These are Truworths customers, not anyone else.
We can't talk about what's happening elsewhere, but we can see Truworths customers who have overlap with our competitors. That we can see. It's data available to us. It's quite interesting because we can see that the average, which is the dotted line of the competitors when it comes to risk, their differentiation between low, high, and medium risk is far lower than ours. If you look at Truworths, the highest risk has the lowest installment. You would imagine it's logical to do that. Medium risk, medium, and the low risk has the highest installments. Obviously, you'd expect that. We note them in our competitors, but our stress, this is our average of all the competitors that we see on our data, has a much narrower band between medium, low, and high risk.
In fact, in the last six months, it's almost static. They're almost the same, and you can see how the high risk has grown significantly. I'm specifically not saying any individual competitors. I must stress that again. It's the average of the big competitors. We do know the individual competitors, but we would never publish that. Sorry, I'm trying to move my screen, and it's sort of got a bit stuck. Here we go. Some of our strategic projects, or I've sort of alluded to it, is aspirational fashion. We are interestingly on a mission to upgrade our fashion, not go value. We're the opposite, and we expanding aspirational brands, better quality, and smarter product. Therefore, that causes better inflation. We are on a mission with essential fashion basics, fabric consolidation to get better prices of better value, better product.
We are enhancing the buying process. We've done an enormous amount of work in systems and the information available to the buyers, the way we're managing them, and the sort of working the inside organic part of the business, the most important, the merchandise. The new DC is fantastic. We're working on size curves, markdown optimization. We're very busy trying to organically accelerate with a vengeance. I'm not gonna go through all of these. There's new brands, and we're working on Identity. Here's some of them. We're sort of soon opening a new concept. I think it's in Johannesburg. There are two big stores in the next six to nine months. We're taking our ladies and men's jeans. Instead of having them separate, men's and ladies, we're now putting it in a jean store. It's gonna be fantastic.
We're taking all of our Street brands. Those of you who know... I'm sure you know what Street is, but the youngsters, We're putting all of our brands together there, and we're opening some new ones. Offspring is one of the new ones. It's our U.K. We own the label Offspring, which is really a store concept of top-end sneakers, but we're putting a clothing range in South Africa into Offspring. It's the sneaker, and we've got this Fuel, which is already ours, and there's another one called Moscow, already ours. We're putting them in one store together. The Elevated, we've got another strategy on Elevated. I'm just giving you a taste of this. Obviously, you can imagine there's much more to it. We've always had Daniel Hechter, but now we've got a new thing on top of that called Hechter.
It's even elevated from Daniel Hechter, and it's going to be in a store together there, Hechter ladies, Hechter men, with one called O'Vila. If you imagine a store where it's Hechter, O'Vila, and then we've got our own Earthaddict and Loads of Living. Together, they make the upmarket aspiration. You've seen the jeans, upmarket aspiration, and I've told you about our street. That's our concept. Identity, we're very busy with Identity. Identity is a great brand. It's cheaper than Truworths, it's younger than Truworths. We are incorporated Sync into it, which is cheaper than Identity and even younger. We think it's a little bit like Truworths.
It's got its own little Emporium evolving here, where we have got this younger, even more energetic than the already younger, and well-priced product in Identity. We're putting them together, and we have started to do it with. I think it's gonna be very successful. This is talking about what Identity stands for, 'cause we do think Identity has got lots of upside. And this is this, the DNA. Just by the way, we do this DNA with every single brand, but not just at the high level, at the sub-level, too. That's the way we try and keep our buyers focused on the task. There's plenty of initiatives on supply chain. You can look at this afterwards, and you can ask us questions.
I've already alluded to most of it, but supply chain is everything leading to arriving in our stores, and that's one year's to 1 1/2 years' worth of effort to get that supply chain to be as best it can. Then, of course, once it arrives in our DC, getting it to store. Those are the two aspects of supply chain, and there's much effort going into both. The last league is the customers, e-commerce, engagement strategies. We're on a, w e're loving AI. It, it's become part of our lives. They all tease me. I'm obsessed with it myself. We've had some fun and games with it recently, with one or two shareholders. Yeah, you know, AI is the future. You've got to buy into AI.
It's like saying, "I don't want to buy into your calculator." The world's changing, and we are right there. We are in the forefront of it in all aspects of our communication, of our thinking, of our technology, of our way we buy, but with always remembering that all of these things are with the art. You know, you, yeah, you could talk about technology and science and systems and processes, but you better have the art, and the art is what actually makes it all work. We're aware of it, and I'm telling you because it's so exciting, and of course, it's very much involved in the customer space and predictive modeling and all that stuff. Retail presence, and Emporium, and we're gonna call it the new Truworths Emporium, the Forme.
Go and look it up. We, AI helped us, by the way. That's, that's where we're moving our new stores onto, and that's gonna be the new Emporium, the Forme, as we're calling it. A much more upmarket concept. This is the jean store I mentioned earlier, men's, ladies together. I'm just giving you quick views of it. The jeans where there's Inwear, the very young Inwear brand in Truworths. Different look. There's Hey Betty, quirky, sort of cute, pretty young fashion. There's Ginger Mary, our internationally fashion, but yet African-inspired fashion. Great brand. Lingerie, we make it into a shop. Does well. Shoes, bags, accessories, not a department, it's a shop. We think like that now. How do we make them into a shop, even though it's within an Emporium? Jewellery, how do you make them into a store?
Like everyone else, everybody's on a mission with this now. Elements Beauty. Elements is already good. We're making it into a proper beauty store like everyone else's. In our case, we've got the major advantage. We've got our own beauty brands. Remember, we've got all the brands, and we've got lots of them, and customers love our brands, and they are famous in South Africa. We are able to put our brands on our products, so it gives us, we think, an advantage. We've got our Kids' Emporium with our lovely brands, LTD. It's got a profile, DNA, naughty, quirky, South African, but unusual, and then Earthchild, sustainable. Those three brands work brilliantly together. Our men's store with Truworths Man, Uzzi, and various others.
Giving you a thing, there's our streetwear store, again, within the store, Fuel, Offspring, Moscow. There's one or two others that are all part of the street thinking and concept all within our store. By the way, when I say it's within a store, it's also gonna be standalones. You could imagine in a mall, you'll have all these things in one big Truworths Emporium, but then in standalone, in appropriate sections of a big mall, you're gonna have the street store in a street section and the elegant, upmarket, sophisticated context, The Villa, Daniel Hechter, in a different part of the mall, even though it's also in the main middle of the mall, in the big emporium. That's how we are now thinking and talking to landlords. There's Loads of Living, Homeware, and this is the new Daniel Hechter.
Of course, this is just a diagram. I mean, it's generated by the by a 3D, but it's giving you a feel of Hechter Paris, the upmarket product, followed by the traditional Daniel Hechter. Then at the back, in the new store, you'll walk into The Villa in context. There's The Villa, and there's it there. Then there's the Trueworths Man, and there's the Identity, and of course, our South African-based Office London. We call Office London, that's the name for the South African. We wouldn't say Office London in the U.K., obviously. Office London, it's great, doing nicely. There's the Sync. We still have some standalone stores, but increasingly it will become linked to Identity. Office U.K, lots going on with supplier base, with suppliers are made to order. We're busy with accessories.
You can imagine you sell socks easily and that kind of thing in Office U.K. Office U.K. hasn't got tons of extra space, so that's primarily sneakers and brands. It's not, it's not apparel. There's a lot of work going on in the supply chain in Office too, and I've told you, we bought a new DC. We're very busy with the stores. And just by the way, that accelerates. The next 12 months, more work on real estate. Not all new. Some new, but not all new. There's some examples. Covent Garden opened recently. We've got to be in Covent Garden. Great, doing nicely. There's Bristol Cabot. This is an interesting one. We had a brilliant Office store here, and we got this position next door to make it bigger, so we opened.
That's the new Office right next door. We didn't want to give up the real estate. This over here is Office, the inside, but now this is the Offspring right next door in the same store that was before Office. That's Offspring there, on the right is Office, and the Offspring now, which of course is elevated, it's the top of the triangle. Offspring is now starting to show its metal by being independent of Office and a different customer, really. There's some overlap, but it's different and quite a lot of different product, and that's also become an opportunity, and that store is doing well. There's a Glasgow new store, Leeds Trinity, Plymouth, Westfield, London. Beautiful store. We've always been there, but we made it much bigger. Look at that, it's.
I mean, it's from a, from a small but dark, funny little store. It's, it's remarkable. Anyone in London, please come visit Westfield. Portobello Road, brand new. Used to be a tiny, little, small store. Poky. It's still same physical size, but it's completely opened up, and it's only opened the last few days, and it's doing great. I mean, significantly up from what our viability said, and you can't compare it to last year. It's Portobello Road. Customer visit Office. What can I say? We've told you about the outlook. In constant currency, group retail sales actually grew by 1.5% in the first. Sorry, that's in the first seven weeks of this part of the year. Truworths Africa, up by 0.6%. Margin, up a bit more. Office U.K., up 3.4%.
What's gonna happen in the future? I don't know, but is it exciting? It's fantastic. We're very busy. Truworths Africa, I've already spoken, and Office U.K. Thank you very much. I'm now gonna get onto questions. Let me see. I'm gonna refresh here, and then I'm gonna get my colleagues to participate. Oh, God, there's lots of questions. The one is about the other income, but I think I've answered that. What's the outlook for credit growth in the full year? I don't know. I can't tell you because it reflects of what's the outlook for our total growth. It's the same. I just tell you, we're on a mission of accelerate. That means accelerate with common sense and within our business philosophy. That, of course, includes credit and new products of credit.
What was internal inflation in Truworths Africa, and what do you see for the full year? We sort of have given you the answer to that. Why was Space growth so strong and Office? Why sales go slowing so much? I mean, Sarah or Manny, you can come in here, but, I mean, I think I've tried to answer that because it's the new stores are doing well, but, I mean, you've got e-commerce, and you've got the non-new stores. When I say new, I mean not remodeled, because a lot of the new actually means not like for like, and it's the existing stores remodeled. Those are having a bit of a tougher time. That is true, and I think I've told you why. Will it change for the better? In my opinion, in the next 12 months, yes.
Is Office still gonna be a success story? Yes. Is it as easy? Maybe not. There are challenges in the U.K. economy, and as I told you, the top brand. Sarah, you're particularly very involved in Office. Do you want to add anything to what I just said?
I don't, Michael, I don't think so. I mean, it's. The exciting part is the fact that the MTO is doing better and, you know, there's a shift a bit towards smarter product on the lady side, so that represents a new opportunity, but it's small in the scheme of things. I think you've covered it well. Thank you.
The share buybacks, Manny, there's a question about that. Do you want to answer that? They're asking, what are you gonna do more share buybacks, and what's the maximum authority you have? You or Ian can either answer if you want.
Michael, I can answer that. I mean, share buybacks, we have permission from the board to buy back shares at a certain amount. We don't disclose what that is, but we buy back shares, as you've mentioned, Michael, when it's opportunistic to do so. They might continue. We'll have to see how it goes, but we have got permission from the board to buy back more.
The GP margin in Truworths, is that because of rand strength? It's not actually. The GP margin slight improvement has got nothing whatsoever to do with the rand strength. If you look at it on the average, like for like, there's not so much rand strength in the period. If you think about it, there are massive rand strength. That's not the reason. The reason is stock management and less markdown. That's the main reason. Please speak to the stock turn deterioration Truworths Africa. It's interesting, post results up there shows sales growth, acceleration, improved margins. Seems to imply lower markdown post-Christmas. Is that correct? Yes, it is correct. Slightly lower improved margins. You mustn't think of stock turn and all that related to just post-half year. It doesn't work like that.
It's how you manage the stock in season and then the consequence of if your sales were bad for the six months, because you don't plan. No one plans negative. On top of it all, you didn't manage it as well as you'd like, then you do have higher markdowns in January, February, and in July, August. I mean, you try to avoid that even when you're not trading well by managing it in season. It's a whole process of managing stock and markdown, so the end consequence is not so much harder in Office because in Truworths, we use our own product, our own fabric, our own everything, and in the U.K., of course, it's brands, and you order it 18 months ahead or something.
I mean, it's long in advance, so it is harder, but, you know, we've got disciplines, and we apply them in Office as well. How should we think about the focus on accelerate with discipline juxtaposed against prudence with the credit extension? Are you signaling intended acceleration in credit growth? Yes, but sensibly. We like to say to you, what's the word we say, Manny? Optimism, we say, no, you're on solid.
Michael, we tend to say we're cautiously optimistic.
That's right. Now what we're saying, we like to talk like this, we're cautiously optimistic. We are. I mean, we're not lying. We are cautiously optimistic, but we're now happy to say the word cautiously can be slightly smaller and less bold, and the optimistic can be slightly bigger and more bold. That's genuinely how we feel. I can't tell you anything more than that, 'cause that's the truth. Yeah, it's all about today... There are a lot of these questions I do. I think credit growth is gonna cause accelerate, and the answer is yes. Remembering, no customer in the world nowadays needs to shop with us because of credit. I mean, when you think about it's ridiculous. They can get credit cards, Buy Now, Pay Later, Lay-bys, cheap products from Temu and Shein and some of our competitors.
I mean, customers have unlimited choice, and they pour it. You can't say, "Oh, we've got credit, so they'll shop with us." It doesn't work like that. Maybe it did 20 years ago. Now, you've got to have the merchandise that they want. Yes, we can offer credit, and we will facilitate credit products and innovation credit. We're very busy with that. Yes, accelerate does mean it, but I can tell you with the overhang and there's no question. The only real issue is to have the merchandise that the customer really wants. It's got to be that. I'm not putting you under pressure, Sarah, 'cause we're all involved in it, but I'm making the point. That's our role. We can't depend on credit. We use credit.
I'm trying to see here. This is quite a long one. Tailwinds, like for like in Office, mature store base. No, it's not a mature store base in Office. In fact, the base, there's a lot of dynamism in Office store base because it's a lot of... I mean, whenever I go to visit the U.K., which is every six weeks or so, Sarah goes a lot, Manny goes sometimes. I spend my life traveling around the country. It's amazing, the opportunities. I mean, usually, I don't know where I've been because I've gone trains everywhere. It doesn't matter because there are opportunities everywhere, and we find them, and we look, and we're very careful about cannibalization and what we spend and how much and where, but the truth is, there are lots of opportunity for Office.
It's not, it's a dynamic process, Tru, the stores that we don't touch because we haven't got to them yet or because they don't warrant it, they're too small, those are not doing nearly as well as the ones we've touched and the new ones. That is true. How much of Truworths product is imported? Sarah, do you want to answer that quickly? They want to know how much Truworths product is imported.
Yeah. It's pretty consistent, just under half, so 45%. It does differ when you include areas like lingerie, which have a much higher component. Our preference is to always maintain a very strong local manufacturing contribution because of the flexibility and the speed that it brings in, and it links directly to our design center and our very strong local manufacturing base.
Thank you, Sarah. The next question is: There are two, they're quite interesting. One is about inventory planning for the year ahead. Are purchases reflecting growth in volume and nominal terms year-over-year, next 12 months? Look, I mean, the truth is, we never plan -3% or whatever Truworths did. I mean, we would be. I mean, that would be foolhardy. We always plan significantly more aggressive than that. Yes, we have planned more aggressive. We've planned for acceleration. Will we do it? I don't know. Will we do close to it? I hope. I don't know. We try. I can tell you, we'll manage it if we don't, and if we even get halfway, we'll be happy. Yes, we plan volume growth. Will we do it? I can't answer you.
The store footprint in Office, have we reached our plateau now? Is it, like, not gonna get better? No. We're now in February. I would say all the way through to November, there's accelerated growth in real estate. Bearing in mind, I'm not saying new stores and extra space. More often than not, it's existing stores, but better trading space. You can't compare, but there are new stores as well. There's a mixture of both, and it's accelerating. Reon, this one wants to know, are the IFRS 16 gains expected to continue over second half and into financial year 2027? Do you wanna give some daylight to that?
Yes, thank you, Michael. I think you answered the question earlier. The IFRS 16 gains that we saw in Office this year, we don't expect to continue. This part, this relates specifically to the D.C. That you mentioned, that we acquired. Obviously, in the ordinary course of business, there are IFRS 16 gains when we do lease terminations and modifications. That's just part of the business. Those are generally much smaller than what we've seen in this year. No, we don't expect this to have a continuing impact.
Reon, another one for you because I think you might know the answer, 'cause I don't. Could you please elaborate on the U.K. numbers? Sales were 6% up, space was 10%. Is this a weighted average base? What was the like-for-like sales for the period, as well as post-December sales three, what is like-for-like?
Yeah. Thank you, Michael. Firstly, we haven't disclosed the like-for-like sales, but to just answer the question on the space, no, the weighted average space, we've disclosed it on the slides, that was around 6.5% for the period.
Thank you. Manny, this is a good one for you. Again, I mean, I don't really agree with the premise of the question, but I can see their point. Why are the numbers of applications appear to come under pressure? Because it used to be 5.5, and now it's only 4.7 million. By the way, I mean, you can do worse than having four million or five million customers applying to open accounts for you every six months or whatever. I think there's 2.5 million there. And it says, current period has seen a drop. Does this relate to consumer resonance? Is there a problem, and what has changed relative to the past? Manny, I think you want to shed some light on that?
Yeah, Michael, I can do that. It's really to do with better targeting of prospects that we think we will that would qualify for an account. It's, we're still having lots of demand, as one can see, 2.5 million applications roughly opened in the six months. For the full year, there'll be close to five million, I would think, of which we open about 18% of those. It's not. It's nothing to do with a lack of demand. It's more to do with optimization of the campaigns and better targeting.
The next one is, well, a question from someone who's on a mission for this permanently. Truworths' board is absent digital and e-commerce retail experience, and to be frank, absent with fresh legs in the form of individuals with the latest retail and digital global developments. Truworths online adding, is it adding such skills to the board in the form of additional non-exec constructive board appointments to contribute input towards future-proofing Truworths? The premise of the question is ridiculous. It just shows a complete lack of understanding of the dynamics of an operating business. Firstly, you can't, a management team that's dependent on the board to drive those things is not worth the salt. The board expects management to be able to do it.
Anyway, if you just look at the CVs and that of our non-exec directors, the, you could call it fresh legs, but you don't know them, and they are incredibly dynamic, and we've got nine new board members over the last couple of years. I mean, our business is. You couldn't be more tuned in to AI, technology, e-commerce. The premise of the question is really, and I happen to know this guy, and actually, your preoccupation with AI and your lack of understanding of it is one of the problems. We are into technology, and we've got plenty of fresh energy and legs in the board, and there's continual re-energizing of the board directors. Every year, we appoint one or two new ones, and obviously, we look at current and current thinking and modern thinking and retail expertise and e-commerce.
You, you have to look at expertise, and if you look at our value system, non-execs are appointed in the same way. Can you share some detail, let me just see this one, as to what the new credit products are planning? Manny, I don't know if you want to talk much about that, but they're asking. I'll keep on referring to the credit products. Clearly, there's a Buy Now, Pay Later thing happening, but I mean, they wanna know, what do you want to tell them?
Well, I mean, it's actually an interesting question because we've been testing a credit product now for the last 2 1/2 years, which is showing promise, and that has opportunity, and it's really been an invite-only credit product that we've used. There's an opportunity now to move that into the open market. That is an opportunity, and if we did that, of course, we'd do it in a very controlled fashion. We've tested a number of other credit products recently, which are showing good promise, and again, we will do that in a controlled manner with using the champion-challenger methodology. Of late and recently, there's been quite a lot of progress with different credit products and so on.
I think if it pans out, it's going to be quite an exciting way ahead in the next two or three years on credit.
The next one is, they're quite interesting, these questions. This, last year, we said we're gonna launch standalone stores with some of the high-end brands, Daniel Hechter, Fuel, Ginger Mary, Moskow. I think I've explained that. They're saying, "How many have we opened?" Look, we, you've got to think of the merchandise and the stores differently. The merchandise we're on a mission right now. This, the winter season, when there's a lot of changes happening, as we talk, in all the brands, including ones you haven't mentioned. New stores, that's different. There we've got, we got the first two big ones opening in the later part of this year, around between August and November, because the big stores open in phases. Then there are a lot of stores that will follow that.
There's already we're gonna do some store-within-store work, and so I can't tell you how many, but the new store element of that is gonna still take time. The merchandise is, we're busy with it already. "How has the average age of your current credit customers changed over the 10 years? Is it correct to assume high-risk credit are younger people?" Obviously, that's true. It hasn't changed much over time because, you know, the people who are creditworthy tend to have proper jobs and more, you know, more, not proper, but more sustainable job with regular income, and therefore you have to be a bit older. That's always been the case. We filling in all the time with all these new customers who are younger and higher risk.
A big thing is how to deal with the new young customers who haven't got a lot of credit experience. They're called thin files. We have to deal with that, and I think we're getting better at it. I interestingly think it's an opportunity of ours, and that's what you can sort of start to see that thing of where there's, as we just said, Manny just spoke about it, less millions of customers applying 'cause we're targeting, but a greater percentage of us opening, 'cause that's a lot to do with that. I think I've answered all the rest of the questions. There was one other. I went through here. Oh, yeah, there's something about 50%. Yeah, there we go.
Is there a future where Truworths South Africa reduces exposure to credit sales, perhaps from 70 down to 50 or below? Again, I need to explain it in a simple way. You could just as easily say to me, do I think that we can reduce credit cards from whatever it is now, 15% or whatever, I have no idea, down to 8? I don't know, because we don't sit and judge the method you use to pay us. We offer everything. We offer credit, our own in-house credit, especially for those who can't get or want it for whatever reason, and they can't get credit cards, or their debit cards haven't got enough money. We do. We're not on a mission to change that because why should we? It gives us a lot of strength.
We have no problem with Buy Now, Pay Later, and credit cards and debit cards. In fact, we are motivating and encouraging with our own Buy Now, Pay Later product. We are universal about the payment measurements. If it dropped from 70% to 50%, which is really, Truworths is higher than our Identity, the, If it ever dropped, it won't be because we've made a strategic decision to outsource it and let someone else run it for us or something. We don't need to. We generate all the cash. We've got all the expertise. It will be because customers have chosen a different means of dealing with us, and we're fine. We're fine with that. That is the essence of it. Look, I mean, I've gone over the time.
It's 2:04. I realize I haven't properly answered all the questions. My colleagues haven't had enough time to talk. Some of you are frustrated 'cause I haven't answered it properly, maybe. There you see it says InvestorRelations@truworths.co.za. You can give us your questions. We will answer you as honestly as we can and as directly as we can. You want to give us a go for it. We'll I can promise you we'll give it back to you as directly as you give it to us and as honestly and above board and ethically. Please email us. Then, when you're still dissatisfied after the email interaction, we for sure will see you. There are conferences coming up very soon. We'll be at them.
If you want to talk to us, with pleasure, we are very open to it. We will be as respectful to us as you are. We will be as respectful to you as you are to us. Thank you very much, and thanks for joining us, and we look forward to speaking to you all again in the not too distant future.