adminGolden Sibanda Senior Business Reporter
Edgars Stores is targeting tighter cost control and wider customer choice to maintain growth and profitability in 2014 but expects a more difficult operating environment compared to last year.Revenue growth in the financial year to January 2014 was marginal, increasing by 8 percent against the comparative prior period.
Retails sales for the period under review were US$64,8 million with after-tax-profit 12 percent higher at US$4,2 million, apparently modest in the wake of tight liquidity environment.
Earnings per share registered a 10 percent growth to 1,7 cents. Cash from operations was 227 percent up on prior year at US$3,6 million.
Profit from manufacturing, which some of the directors contemplated closing down, increased 234 percent to US$377 000.
Mrs Masterson said the operation has been turned around.
The results for the period to January 2014 were achieved against a background of shrinking economy, increased competition, heavily borrowed customer base and uneven playing field, which remain largely unchanged going into 2014.
Both turnover and after-tax-profit are seen marginally higher in the 2014 financial year at US$70 million and US$4,7 million, as competition and shrinking economy weigh on operations.
However, the Zimbabwe Stock Exchange-listed retailer is targeting better customer choices and tighter cost control as it seeks to maintain the momentum and profitability trajectory.
Gross margin is projected at 47 percent, trading profit and finance costs are seen at 8 and 2,7 percent of revenue, respectively.
“Focus will be on cost control, more fashion, less price and wider choice for customers,” managing director Linda Masterson said at the company’s analysts briefing yesterday.
“Emphasis will be on enhancing customers shopping experience through various initiatives with greater leverage on the sourcing of merchandise”, group chairman Mr Themba Sibanda also said in a statement to the financial results.
Edgars chain sales grew by 5 percent to US$52,4 million, representing 80 percent of retail group retail sales with 72 percent of that being credit sales generated from a total of 26 stores.
Trading stores increased to 26 from 24 for Edgar’s and 16-23 for Jet.
Mrs Masterson said only one shop was planned for opening this year in light of a more difficult outlook except where distinctly attractive opportunities are identified.
Jet results, Edgars said, were below expectations although sales increased by 17 percent to US$13 million, but profits decreased by 40 percent to US$522 527 from US$869 224.
“This decrease in profit is partly attributable to start up costs associated with the opening of new branches,” said Mr Sibanda.
The number of units sold by Edgars increased by 64 percent to about 2,6 million units while Jet outlets rose by 36 percent to just over 1,3 million on the back of increased outlets.
“While the outlook for 2014 appears difficult, we will continue to seek and exploit opportunities to achieve profitable growth for the group in the medium term,” he said.
The number of customer accounts went up by 9 percent to 197 332 with active accounts reported at just over 70 percent.
Borrowing costs as a percentage of revenue declined from 5,4 percent in 2011 to 2,6 percent in 2013 while net finance costs decreased from US$2,7 million to US$1,7 million in line with total borrowing, which dropped to US$16,5 million in 2013 from US$21,3 million in the prior comparative financial period.
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