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Tinashe Makichi Business Reporter.
Meikles Stores, a unit of Zimbabwe Stock Exchange listed Meikles Limited, will save about US$1million after rescinding its earlier decision to lay off 55 workers last year.
The retail giant wanted to retrench the workers citing viability challenges due to low demand and competition from the informal sector, but reversed its decision after the Retrenchment Board ordered it to pay about US$1 million in retrenchment packages.
Late Last year, Meikles Stores said the money saved from the reversed retrenchment exercise would be invested into reconfiguring its business model and growing the business.
Chief executive Mrs Belinda Sharples said the company has since reinstated the workers after deciding to reinvest the funds earmarked for packages in order grow the business.
“The company currently is not in a shape to pay the packages proposed by the Retrenchment Board as liquidity continues to hit us.
“It is better for us to grow the business and create employment rather than pay the packages,” Mrs Sharples said.
She added that the company was prepared to carry the costs of foregoing retrenchment with the workers already working in the retailer’s sister department stores.
Meikles Limited executive chairman Mr John Moxon last year said the economic environment dictated that priority be given to food, basic necessities ahead of luxuries. The difficult environment has limited the amount available as disposable income.
“There has been rationalisation, including the closure of nine home and beauty shops, operated by the group. The deteriorating liquidity in the market has caused us to curtail credit.
“The department store concept is slowly being overtaken by events globally, hence the need to downsize by reducing trading space and trimming staff as well,” Mr Moxon said
Mr Moxon said funding limitations were caused by their inability to access a deposit with the Reserve Bank of Zimbabwe resulting in failure to stock appropriately.
Meikles Stores last year recorded an Earnings Before Interest, Tax, Depreciation and Amortization loss of US$1,3 million, compared to a loss of US$2,2 million in 2012.
Meikles was reluctant to pay the packages after the Retrenchment Board ordered it to pay a month and a half salary per year served, which did go well with the retail company.
The department store embarked on a drive to change its business model as well as refurbishing most of its stores following the reversal of the retrenchment exercise.
It has been posting losses since the advent of dollarisation four years ago and in August this year the retail company announced its intention to lay off the 55 workers.
The Thomas Meikles Stores group currently comprises eight department stores: Barbours, Greatermans and Meikles Department stores in Harare, including the specialised hardware outlet in Orr Street; a Barbours Store at Sam Levy’s Village, Borrowdale, and Meikles Department Stores in Bulawayo, Gweru, Mutare and Masvingo.
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