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says it stands to benefit significantly from expanding capacities of OK Marimba, OK Fife Avenue and extensive refurbishment of Bon Marche stores.
“OK Marimba can do much more than it is doing now,” said OK Zimbabwe chief executive Mr Willard Zireva.
“OK Fife Avenue can also do better. We need to expand it by 50 percent.” The retail giant and hypermarket operator will also carry out extensive refurbishment work on its Kadoma, Chinhoyi and Lobengula (Bulawayo) outlets.
OK Zimbabwe currently operates 53 outlets constituted by 44 OK branded stores, seven Bon Marche outlets and two OK Mart branches. Plans are on course to open two new stores this financial year.
Mr Zireva said the company would use a combination of the US$5 million convertible loan received from investors (Investec) in 2010 and about US$11 million from internally generated resources.
The massive capital project, including the upgrading of distribution facilities, risk and security management systems comes as OK continues making inroads in consolidating its market leadership.
This has reflected in improved financial performance and profitability over the last three years, despite the many challenges it faces.
The firm has thus rewarded shareholders with a US0,35c dividend and will pay out US$3,6 million, compared with US$2,7 million paid out last year.
OK Zimbabwe recorded a 60 percent growth in sales in the full year to March 31, 2012 against 5 percent annual inflation, spurred by strong contribution from OK Mart, shrinking informal market, retreating competition, improved and efficient facilities.
Mr Zireva said even the fires at one of its warehouses and outlet, which destroyed goods worth about US$2,2 million, did not affect its operations to the extent it weighed down on the profits it reported.
He said the company had full cover insurance for the stock that was destroyed while the rented warehouse was also insured, which meant there was insignificant liability to be incurred from the fires.
Sales grew from US$252 million over the full year to March 2011 to US$412 million in 2012 while profit before and after tax rose 181 percent and 140 percent to US$15 million and US$10 million, respectively.
Net operating costs increased by 39 percent to US$28 million due to higher electricity tariffs and the high cost of running generators after power cuts. But the ratio of the expenses to sales decreased as the effect of rising expenses was dwarfed by sales growth.
But the firm anticipates further improved performance this financial year due to its strong balance sheet and weakening competition.
Mr Zireva said the group’s policy was to grow 5 percent above gross domestic product and annual inflation, estimated by Finance Minister Tendai Biti at 9,4 percent and 5 percent this year.
But OK Zimbabwe recognised that the economy might not achieve the forecast economic growth due to the missed crop production targets in respect of tobacco and maize.
Tobacco was initially estimated to reach 150 million kg, but is now seen topping only 130 million kg, while maize could total just under a million tonnes instead of 1,5 million tonnes.
“The missed targets (in agriculture) could affect the performance of every organisation,” said Mr Zireva.
Other factors to weigh on the burdened economy include power shortages, tight liquidity conditions, slowing exports, dwindling donor support, high interest rates and stagnant employment growth.
Online Reporter