OK Zim starts restocking

Nqobile Bhebhe, [email protected]
LISTED retail giant, OK Zimbabwe Limited, has begun restocking and modifying its procurement models to strengthen vital supply relationships with both local and foreign suppliers, ensuring business viability.

The group has also welcomed the Monetary Policy Statement measures, which have lifted several restrictions and introduced greater flexibility to the foreign exchange market.

In December last year, the Zimbabwe Stock Exchange-listed group reassured stakeholders of its continued viability despite experiencing intermittent product supply challenges during the festive season.

The company pledged to restore normal supply levels while working to stabilise the trading environment in collaboration with key partners.

This follows a period in which the group experienced stock shortages during the third quarter ended 31 December 2024, as daily availability levels fell to around 50 per cent of normal stocking levels.
This sparked speculation that the 83-year-old retail chain, which recently closed four outlets across the country, was on the verge of collapse.

The firm attributed the stock shortages to restricted supplies from manufacturers and distributors.
Additionally, the group had outstanding and overdue creditors’ balances, which were predominantly denominated in US dollars against a backdrop of low US dollar sales collection, at times reaching as little as 20 per cent of total sales revenue.

In a recent trading update, group company secretary Mrs Margaret Munyuru stated that the low stocking levels were a direct consequence of sub-economic pricing arising from exchange rate distortions and suppliers’ need for foreign currency invoicing to cover operational and raw material costs.

She explained that suppliers continued to insist on shorter trading terms and, in some cases, prepayments for supplies invoiced in local currency.

This exerted pressure on the business’s working capital, creating the need to secure short-term funding.

However, Mrs Munyuru noted that the company had begun restocking its operating units, with support from supplier partners and financial institutions that continue to assist with short-term funding structures.

“New alternative procurement models have been developed, including, but not limited to, a structured stock supply arrangement with a third party for supplier assurance purposes, as the business works to restore critical supply relationships with both local and foreign suppliers.

“The group is confident of restoring normal stocking levels before the end of the current financial year,” she said.
Mrs Munyuru emphasised that the fortunes of the country’s formal retail sector depend on exchange rate stability.

“Consultations with both fiscal and monetary authorities have led to a relaxation of the strict policing of applicable in-store exchange rates. The group welcomes the recently announced Monetary Policy Statement measures, which have removed a number of limitations and introduced a degree of flexibility within the foreign exchange market,” she said.

“However, there is a need for absolute clarity on the roadmap towards a fully market-determined exchange rate system. Such a liberalised system would go a long way in restoring the competitiveness of the formal retail sector.”

Mrs Munyuru also noted that power outages had worsened during the quarter under review, disrupting business operations and increasing operating costs as the company relied more on alternative power sources.
To mitigate rising operating costs, the group decided to close four branches in Glen Norah, Kuwadzana 5, Chitungwiza Town Centre, and Robson Manyika Street, all in Harare.

However, she stated that a review is underway regarding the future of branches struggling with unsustainable operating costs and costly licensing requirements.
During the period under review, volumes decreased by 36 per cent compared to the same period last year.

However, on a year-to-date basis, the group recorded volume growth of 10 per cent over the same period.
The reduction in volumes recorded during the quarter resulted in a 36 per cent decline in revenue compared to the prior period.