Covid-19 hammers OK

LIVINGSTONE MARUFU 

Listed supermarket chain, OK Zimbabwe Limited’s profit slumped 33% to ZWL$999.5m in the six months to September 30,2020 from ZWL$1.5bn reported in the prior comparative period after revenues for the group were hammered by the Covid-19 pandemic. 

Revenue fell 15.5% to ZWL$11.6bn during the reviewed period from ZWL$13.8bn recorded in the same period last year.

The group said its response to fight Covid-19 pandemic impacted overheads. The retailer’s contingent rentals, repairs and maintenance, bank charges and cleaning expenses also significantly contributed to increase in overheads.

The deadly virus also dealt a hammer blow to OK Zimbabwe’s sales volumes, which plunged 26.9% compared to the same period in 2019 due to declining aggregate demand.

 OK Zimbabwe board chairman, Herbert Nkala, however, credited the auction system, which was introduced in June this year replacing the interbank rate, saying it allowed the company to meet all its forex needs during the period under review.

“Between allocations from the auction and the foreign currency sales generated in the business, the group was able to pay for all its import requirements,” Nkala said. 

 Capital expenditure for the half year amounted to ZWL$384.9m, from ZWL$51.5m recorded in the prior comparative period. 

Most of the capital expenditure was on store refurbishments and equipping new stores. 

Earnings did not keep pace with increases in prices and this, in addition to the effect of Covid-19, constrained demand. 

 The group’s capital expenditure programme continued during the period and store refurbishments were completed at OK Avonlea and OK Machipisa. 

Customers responded positively to the improved facilities in-store, leading to improved sales. 

 The group embarked on a refreshing exercise for all its three store brands, namely OK, Bon Marche’ and OK mart, to reflect how it is staying abreast with customers’ requirements and aspirations. 

The Covid-19 pandemic was declared a pandemic and the country went into lockdown from March 30 2020 and the lockdown restrictions remained in place at different levels throughout the period under review. 

The containment measures affected business through limited production, supply chain disruptions, logistical bottlenecks and reduced aggregate demand but the Covid-19 induced restrictions have been relaxed in recent months. 

However, developments elsewhere around the world show that the fight against the pandemic is not yet over. 

The group continues to be guided by pronouncements from the World Health Organisation and the Ministry of Health and Child Care for measures that protect our staff and other stakeholders. 

Post the reporting period, the group opened a new OKmart store in Victoria Falls on October 1, 2020 and an OK Store in Harare’s Sanganayi Inn area on November 5 2020. 

The new stores were well received in the respective markets and are expected to contribute meaningfully to the group’s revenue, Nkala said. 

 He also said the group’s refurbishment programme will continue, and eight stores have been targeted for completion by the end of the financial year. 

Ok, will also continue to work with supplier partners to ensure the stores are adequately stocked for the festive season and beyond, and this will assist to recover volume sales, Nkala said.  

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