Edgars to migrate to Victoria Falls Stock Exchange

RETAIL clothing giant, Edgars Stores Limited, has revealed its intention of migrating to the United States dollar-denominated Victoria Falls Stock Exchange (VFEX), and is on course to become the first clothing entity to list on the bourse.

The intended move from the Zimbabwe Stock Exchange (ZSE) is, however, subject to shareholder approval and the granting of all necessary regulatory authorisations.

In a cautionary notice, new company secretary, Chipo Mafunga said the directors have since approved the de-listing of the firm from ZSE.

“The Directors of Edgars Stores Limited wish to advise all shareholders and the investing public that the board, subject to shareholder approval and the granting of all necessary regulatory authorisations, has approved the de-listing of the company from the Zimbabwe Stock Exchange, immediately followed by its listing on the Victoria Falls Stock Exchange,” she said.

She noted that shareholders will be apprised on the transaction once all regulatory processes have been finalised.

Edgars Stores Limited engages in the retail of clothing, footwear, textiles, and accessories in Zimbabwe, and the company operates through six segments: Edgars Stores Retail, Jet Stores Retail, Manufacturing Carousel, Micro Finance Club Plus, Corporate Head Office, and Financial Services.

In addition, it provides microfinance loans to the lower — to middle-income customer group.

Once the transaction sails through, Edgars will join a trail of other counters that have migrated to the VFEX, on the back of its attractiveness and ability to increase the visibility of a company listed on it, which can help attract new customers, suppliers and partners.

The bourse is a subsidiary of the ZSE established to kick start the Offshore Financial Services Centre (OFSC) earmarked for the special economic zone in Victoria Falls.

It is part of efforts to attract global capital and restore foreign investor confidence in Zimbabwe’s capital markets and help companies raise capital in foreign currency.

Being a US dollar-denominated exchange, the VFEX enables businesses to raise capital in foreign currency, at a time the country is still battling forex shortages.

Investors who participate in the VFEX benefit from the ability to move their capital and dividends in and out freely, low transaction costs, tax incentives that include a five percent dividend withholding tax for foreign investors and exemption from capital gains withholding tax for all investors and minimal currency risks.

Listed entities cut across mining, property, banking and hospitality sectors.

In its business update for the nine months of the 2023 financial year, the entity said it expects the operating environment to remain stable for the remaining part of the year, creating opportunities for the business to grow further.

It said it will continue to refine its business model to adapt to changes taking place in the economy.

“The Group is very confident that its turnaround initiatives are paying dividends as our operating results continue to improve each month with gross profit per unit going up while cost per unit is declining.

“The business is alive to opportunities presented to expand both our brick and mortar and online footprint and develop a resilient business model that will withstand the impact of future shocks and disruptions,” it noted.

Unit sales for the third quarter to October 2008 jumped 28,5 percent, but cumulative nine-month sales were 2,4 percent below the previous year, with currency instability affecting the purchasing power of civil servants, a significant customer segment.

Civil servants account for 35 percent of the group’s business.

The flagship Edgars chain achieved third-quarter unit sales of 260,043, representing a growth of 39,7 percent in the prior year.

However, cumulatively for the nine months to October 8, the chain unit sales were 2,16 percent down on the prior year to 703,253.

Jet, another chain under the group, achieved an 18 percent increase to 334,910 in unit sales for the third quarter compared to 283,877 achieved in the comparable period of the prior year.

However, the cumulative nine-month sales showed a 4,1 percent decrease.

Credit sales constituted a substantial portion of total sales for both chains, with reduced stock covers at the end of the quarter.

In the financial services sector, finance income decreased by 32,8 percent, with the local currency book reducing to $2,67 billion from a December 2022 balance of $2,85 billion, while the US dollar book grew 50 percent on the December 2022 balance to close at US$9,50 million.

Manufacturing experienced a notable 54,6 percent growth in sales units, with plans to acquire new machines for efficiency and capacity improvement.

The micro-finance sector reported a 3,6 percent increase in the US dollar loan book but a significant 92,1 percent decrease in the local currency loan book.