admin
Fradreck Gorwe
Zimbabwe Stock Exchange-listed clothing retailer, Edgars Limited has reported a 154 percent jump in year-to-date turnover to September 2019 irrespective of the widely lamented diminishing consumer purchasing power that affected the performance of unit sales.
The Group’s earnings before interest, tax, depreciation and amortization, (EBITDA) went up by 604 percent on prior year.
Dollar sales for three segments, the Edgars Chain, Jet Chain and Carousel, went up by 151, 146, and 240 percent respectively for the year to September 2019 as juxtaposed prior year comparative. For Carousel, 2 percent of total sales were exports.
Unit sales, however, recorded decline across segments. The Edgars Chain recorded 25 percent drop in unit sales compared to 2018 comparative. Jet Chain unit sales were down by 23 percent while Carousel unit sales dropped by 9 percent.
Financial services recorded a drop in the number of total active accounts to 145 737 from 154 045 in 2018, possibly on the back of low disposable incomes mentioned above. The Debtors book (net of allowance for credit losses), recorded a 113 percent increase to $45 million compared to the 2018 amount. 3,9 percent of the debtors’ book were over 30 days due while 83 percent was current. Financial services’ debtors book is reportedly clean.
To mitigate against the brunt of inflation on the debtors’ book, “interest rates were increased on all credit products.”
“The group has a hedging policy in place to preserve its debtors book against inflationary effects,” said managing director Linda Masterson.
Club Plus, recorded a 58 percent growth in loan book size to $5,8 million while its interest income for the period was $2,9 million, representing 189 percent increase from prior year. Again, Club Plus’ loan book is clean with 86 percent loans on current and non-performing loans (NPLs) at 4,1 percent as at the close of September 2019.The group, however, recorded an increase in borrowings on the back of increasing working capital requirements. Total borrowings surged to $23 million from $7,5 million in 2018. Of the total borrowings, $10,1 million is reportedly payable within 12 months with the balance expected to be cleared in 2020 and 2022.
Borrowings are even expected to mount into the future according to Masterson;
“We expect our borrowings to continue to grow due to increasing working capital requirements in the face of rising inflation and the need to grow footprint and give stores a facelift in critical locations,” she said.
Adding to the negatives, finance costs increased by 240 percent compared to 2018 figures. These costs are also said to be continuing on an increase “in line with increasing minimum lending rates.”
Further, trade and other liabilities went up 264 percent to $31 million compared to what accrued in 2018. Foreign liabilities for the period under review was Euro 280 000. Franchise fees galloped $2,3 million and the group reportedly applied to RBZ to register it as a legacy debt.
Meanwhile, good news is that the group is well stocked for the festive season cognizance of a 454 percent increase in retail inventory to $56 million. A new Jet Store was opened in Banket while premises were secured for another Jet store in Chegutu, also expected to open for Christmas trading. More so, a new store curtesy of Edgars Chain will be opened in Kadoma on Black Friday, November 29, 2019. Going forward, the group aims to improve on products as well as working towards creating shareholder value.
“We are planning for positive unit growth in the last quarter to December 2019. The business is committed to delivering growth to shareholders and good products at the best prices to our customer. We are geared to take advantage of any opportunities that arise,” said Masterson.
Online Reporter