Edgars group sales down 3pc

Clothing retail group Edgars yesterday said sales had dropped by three percent in the first three months of this year weighed down by liquidity challenges and uncertainty over salaries for government workers.
Civil servants constitute a bulk of the retail group’s customers, but government has deferred pay dates for its 230,000 workers twice this year. The state awarded the workers a 23 percent wage increase in April which analysts say is unsustainable.

Edgars group managing director Linda Masterson told shareholders at the company’s Annual General Meeting in Bulawayo that sales recovered after civil servants received back pay in April, but were still 2,5 percent below last year.
Gross margins however were consistent with last year at 45,3 percent.

Masterson reported that the group recorded a year-to-date loss of $281,000 in the four months.
“Finance costs year-to-date are 12,3 percent worse than the budget and 7.9 percent worse than last year,” she said.
The group’s debtor’s book remains healthy although customers are paying later than last year.

Current debtors are 73,7 percent of the book compared to 76,5 percent last year.
She said customer base has grown to more than 200,000 of which 70 percent were active by end of April.

Masterson said the group’s extended credit scheme which gave customers 12 months to pay had sales in May and expects the momentum to pick up as the year progresses.

Low cost outlet, Jet, continues to struggle taking a toll from massive discounting offered by its competitors.
Masterson said overall results could still fall below estimates if the economy does not improve.

“Even given the improved performance from Edgars chain, if nothing significant changes in the macro-economic environment, our results could be below target,” she said.

“It is too early to say by how much, we will have to see how the (poor economy) continues to impact in the months ahead.”
The group recorded a $4,2 million after tax profit for the full year to December 31, 2013 despite poor sales over the festive season and expected it to rise to $4,7 million in the current financial year by tightening costs and increasing its product offering.-Source