admin
Enacy Mapakame
A slowdown in demand due to waning disposable incomes is weighing on listed clothing retailer Edgars Stores Limited’s performance.
This has been worsened by the effects of Covid -19 pandemic, which saw the country effect various levels of lockdowns resulting in the group close its physical stores for more than seven weeks during the quarter to April 11, 2021.
“The biggest constraint is low demand as a result of low disposable incomes of our customers in general,” said chief executive officer Tjeludo Ndlovu in a trading update for quarter.
“The percentage of disposable incomes spent by Zimbabweans on food is as high as 79 percent of total income, which crowds out discretionary spending on other needs such as clothing,” she said.
During the quarter, online stores were open but recorded very little business due to delivery constraints during lockdown.
Normal trading only resumed on March 03, 2021, which was a relief to turnover and to cash-flows.
Ndlovu indicated while business remained depressed, debtors sustained the company during the lockdown period.
“The debtor’s book collections, however, kept the company going during lockdown as most of our credit customers paid their instalments on time.
“Lessons drawn from the first lockdown assisted the company in improving online payment platforms for our customers, hence a significant increase in collections during the 2nd lockdown compared to 2020 lockdown,” she said.
Year-to-date turnover for the quarter was down 17 percent in inflation adjusted terms compared to previous year’s quarter.
Units sold for the year to date declined to 417,639 from 542,082 last year resulting in a 17 percent decline in EBITDA as the group traded for just above six weeks in the quarter.
Borrowings at end of Q1 trading period were $364 million up from $245 million in December 2020.
Bongani Ndlovu