admineroded by an expensive debt structure, which the company has since abandoned. He said Pelhams had entered into a US$20 million credit supply agreement with TN Harlequin on favourable payment terms.
TN Harlequin, a manufacturer of household furniture with a similar retail network to Pelhams, is a subsidiary of Lifestyle Holdings.
Lifestyle Holdings, a Zimbabwe Stock Exchange-listed firm, owns 21 percent shareholding in Pelhams.
Mr Chikowore said the group had also closed four “non-performing” branches while packages for senior executives were also reduced to cut costs.
“With a cocktail of all these measures, we believe by the end of the current financial period, the group will return to profitability,” said Mr Chikowore.
“The structure (which supports the group’s credit retail model) that we now have can take us to a better level.”
Group chairman Mr Tawanda Nyambirai said the overheads alignment was a key element to achieve profitability. “The company will also stock exclusive lines manufactured within the group specifically for Pelhams to enhance margins and improve stock levels across the company’s branch network,” he said in a statement accompanying the group’s financial results for the year ended March 31.
During the period under review, Pelhams’ revenue fell 46 percent from US$21,2 million to US$11,4 million.
Credit sales, the major revenue driver last year, were curtailed to strike a balance between cash sales and credit sales thus the debtors book was reduced from US$10,3 million to US$5,8 million.
Gross profit margin declined slightly from 27 percent to 26 percent owing to the reduced credit sales and in the period under review the company made an operating loss of US$400 000 compared to a profit of US$4,3 million.
A huge finance bill of US$2 million worsened the bottom line of the company to close the year at a negative US$1,7 million helped by a tax credit of US$600 000.
Operating cash flow position improved owing to the reduction of debtors from US$7,3 million to US$4,7 million and investment in inventories was slightly reduced.
Thus from working capital management alone the company generated US$4 million compared to an outflow of US$6,2 million.
Current liabilities were reduced by US$700 000 but they remained high at US$8 million against current assets of US$7 million.
Current ratio remained weak at 0,86 percent compared to 1,12 percent in the prior year. Interest-bearing debt at US$4,6 million was down US$1 million from the prior year.
Pelhams said it has engaged a consultant to work on the introduction of a “performance culture” that would see the conversion of branch staff from being store keepers to sales persons who would go out to look for business.
The group said it also suspended two directors (finance and operations) two months ago and “separation proceedings are at an advanced stage”.
Online Reporter