Edgars remodeling to capitalise on opportunities

Business Reporter

Edgars Stores Limited says it continues to remodel the business to capitalise on opportunities that arise in the current operating environment while cost containment remains a focus area to ensure the long-term viability of the business.

The clothing retailer said authorities needed to urgently intervene with various policy measures to help stabilise the foreign exchange market and tame inflationary pressures.

Group chairman Thembinkosi Sibanda, in a statement of financials for the 52 weeks ended 08 January 2023, said the group sought to expand its geographic footprint through the opening of new stores in strategic locations.

“Smart merchandise procurement and optimal inventory planning remain key focus areas to ensure that target margins are achieved without compromising the merchandise quality.

“We will continue to transform our customer experience through updating our stores to world-class standards, offering widened merchandise ranges at affordable prices and flexible credit terms,” he said.

He said the recovery of the business was premised on improved access to foreign currency through domestic sales to cover import requirements, a stable exchange rate and slower inflation.

He noted that on the currency front, the environment had remained turbid, marked by the sharp depreciation of the local currency.

However, notwithstanding the challenges in the operating environment, the group managed to close the period with improved performance, which saw revenue increasing 51,7 percent to $35,9 billion from $23,7 billion.

“The growth in real terms is attributed to volume recovery, replacement cost-based pricing, ongoing cost management as well as initiatives implemented by management to ensure fresher stock availability in our stores, regardless of the supply chain challenges,” said Mr Sibanda.

The group’s profit before tax of $1,9billion was a decline of 5,7 percent from the prior period of $2,0 billion.

Mr Sibanda said profit for the year was weighed down by higher finance costs emanating from the revision of the minimum lending rates by the Reserve Bank of Zimbabwe to 200 percent.

“The result was the finance costs of $4,3billion, a growth of 117 percent on the prior year of $1,9billion. The business was not able to recover these costs from our customers,” he said.

During the period under review, total group units sold increased by 13,1 percent from 2,4 million to 2,7million compared to the same period last year.

Mr Sibanda said trading in foreign currency since April 2020 has allowed the retail chains to improve stock assortments, which in turn has increased traffic in-stores.

“While a sizable portion of our cash sales are in foreign currency, we believe that this proportion can be increased through favourable and consistent application of regulatory policies around trading in foreign currency,” he said.

Mr Sibanda said funding was channeled towards growing the debtors’ book as well as store expansion initiatives.

“At the end of the reporting period, the company had US$134 000 foreign liabilities which it will be able to service from existing resources,” he said.

In terms of retail performance, total retail merchandise revenue amounted to $26,2billion representing a 36,8 percent increase from prior year.

“The split between credit and cash sales for the Zimbabwe dollar was 48,8 percent compared to 61,2 percent in 2022 and 51,2 percent from 38,8 percent in 2022 while the US dollar sales had a credit sales contribution of 71 percent and cash sales of 29,0 percent,” said Mr Sibanda.

During the period under review, the Edgars chain recorded turnover of $14,6 billion up 41,6 percent from prior year of $10,3 billion, and the 1,16 million units sold were up 21,1 percent from 956 000 in the comparative period.

The split between credit and cash sales was 54,5 percent and 45,5 percent while the USD sales had credit sales of 71,6 percent and cash sales of 28,4 percent.

“We revamped our Masvingo store in November 2022. Stock covers closed at 11 weeks,” said Mr Sibanda.

Total sales for the Jet chain were $11,7billion up 35,58 percent from $8,6 billion achieved in the comparative period.

He said the split between credit and cash sales for Zimbabwe dollar was 43,1 percent and 56,9 percent while the USD sales had credit sales of 70,3 percent and cash sales of 29,7 percent.