PHILLIMON MHLANGA
Listed retailer Edgars Stores Limited’s performance plunged during the 52
weeks to January 5, 2020, with the biggest factor for the downturn being the tumbling consumer spending in a tough economic environment.
The group’s latest financial results show that damage was felt across the
board with the retailer faring badly.
The group’s revenues in the reviewed period fell 5% to ZWL$595.2m
from ZWL$629m reported in the prior comparable year due to a
challenging operating environment.
Sales volumes for the group dropped 23%.
“Revenue performance for the last quarter, usually our peak turnover period, performed below expectations mainly due to subdued
consumer spending in general and challenges with mobile payments
platforms,” the company’s board chairman Thembinkosi Sibanda
said.
Finance costs rocketed by 85% to ZWL$13m during the reviewed
period from ZWL$7m recorded in the same period in 2018. The
group suffered a monetary loss of ZWL$20m from a gain of
ZWL$140m in the period year.
Profit for the year plummeted 81% to ZWL$18m from ZWL$92m
the previous year.
Analysts told Business Times that that retailer’s numbers are
expected to further dive this year as measures to contain the spread of the
coronavirus are likely to add misery to the country’s brick and mortar
stores.
The collapse in retail spending comes amid job losses during 2019
when more than 200 000 workers were thrown onto the streets.
The laying off of workers is mounting this year as many have been forced
to go into lockdown meant to curb the spread of the deadly
coronavirus pandemic.
President Emerson Mnangagwa last Saturday imposed an indefinite extension of Zimbabwe’s lockdown, meaning consumers will be confronted with limited disposable income.
Consumers are also restricted from getting to shops as the pandemic
virus fight keeps them at home.
Economic data shows that clothing stores have taken the biggest
hit.
The Edgars chain recorded a turnover of ZWL$390m from ZWL$368m out of its 26 stores, reflecting a 6% increase. Sales volumes went down 19% to 1.399m from 1.736m in the prior year. Profit to sales ratio declined to 24.1% from 27.3% in the prior year.
Total turnover for Jet chain was ZWL$218.7m from ZWL$245.2m
out of 27 stores, which was a decrease of 10.8%. Volumes declined by
27.6%. The chain’s profit to sales ratio declined 19.6% from 22.8% in
the prior year.
The factory made an operating profit of ZZWL$12.6m from a ZWL$12. 8m loss in the previous year. About 6% of sales were exports while 94% were made to Edgar’s and Jet chains.
The microfinance business revenue declined marginally to ZWL$12.4m
from ZWL$12.8m. Profit after tax stood at ZWL$924 000 from
ZWL$5.2m reported in the prior year. Loans to customers declined
to ZWL$6.5m from ZWL$27.1m after an allowance for credit losses of
ZWL$0.05m.
Total assets for the group were 27% up to ZWL$580m from ZWL$456m. Total liabilities went up 68% to ZWL$181m from ZWL$108m.
Sibanda said the quality of the group’s debtors book was good with
3% of the book over 30 days due while 75.5% being current.
The group debtors’ book grew 211% to ZWL$34.25m from
ZWL$11m.
Borrowings increased 15% to ZWL$60m from ZWL$52M.
Gearing was down to 0.20 from 0.22.
The group had US$219.036 in foreign liabilities as of January 5, 2020.
The group closed the year in an overstock position. Inventories stood
at ZWL$301m from ZWL$122m.
“This was fresh stock and placed the group at an advantage for firstquarter trading,” Sibanda said.
