Edgars projects strong future growth

LIVINGSTONE MARUFU

Edgars Stores Limited, a publicly traded retail clothing company, is confident about its future prospects, fueled by a capital investment of US$1.2m in its manufacturing division, Business Times can report.

This investment has significantly improved operational efficiencies and reduced costs.

Speaking during a tour of Carousel, Group CEO, Savious Mushosho emphasised that further investment in the manufacturing division is expected to turn the  company from a loss-making entity into a profitable one, driven by enhanced efficiencies.

“The group invested US$1.2m in expanding production capacity during the period, mostly towards semi-automated machines, automated pocket machines, surface printers, boiler replacement, embroidery machines, fuser machine, and an enhanced cutting room solution.

Production efficiencies continue to improve on the back of an increased order book and the recruitment of experienced, qualified machinists,” Mushosho said.

As a result, the manufacturing division contributed significantly to group sales, which surged by 95%, rising to 132 600 units  from 67 900 units in the prior half year period.

Carousel’s turnover  also saw  substantial growth, increasing to US$1.49m from US$852 000.

Mushosho acknowledged the company’s previous challenges but highlighted  that cost containment  and the retooling of the manufacturing division had transformed  its financial outlook.

“We had to deal with our costs, which was the biggest elephant in the room.

We were increasing our  margins. They were increasing because of what is happening here.

The costs went down this year when we started pushing production.

 The costs have gone down by 8% . The cost of merchandise to the customer. We passed on  8% reduction because of production at Carousel.

 That’s the impact of what’s happening here,” Mushosho said.

 “We believe that we are well set up for next year, you see the whole express chains we are launching.

This is business for next year.

We are setting up business for next year,” he added.

Despite a challenging 2024, Mushosho said the company has managed to  remain focused, profitable and maintain a strong balance sheet.

He reflected: “When you are in a year of drought and currency confusion, you won’t expect to sell that much.

The business has been restructured to make sure that the business optimises its costs and becomes more efficient.

The new machines brought efficiency that’s why costs came down.

It makes you produce more units, the more the units you produce, the less the costs.

 Your fixed costs are absorbed by more units so next is gonna be quite more enjoyable to watch.”

Mushosho expects the first half of  2025 to be particularly promising.

“We anticipate  exciting  developments happening next year.

“I think  results in the first six month of next year should be more impressive  than this year.

I  look forward to discussing  our progress during the analyst briefing where we will be publishing the Q3 trading update.

We will talk about it when we meet next year,” Mushosho said.

In line with its growth strategy, Edgars is also fostering local talent by providing a platform for emerging designers to showcase their skills through the annual Fashion Extravaganza.

“Our commitment goes beyond just selling clothes but we believe in nurturing talent  in supporting local designers in providing a platform for them to shine. That is the culture of Fashion Extravaganza. We are raising the next generation in the fashion industry and tonight we are witnessing how creative these individuals are,” he said.

Mushosho also noted the seasonal nature of customers’ buying  habits, with customers typically making purchases after paying fees in April and May, followed by a slowdown in June as they buy  warm clothing and shoes.

He pointed out that customers tend to spend more during the summer months, which is the second half of the year.

The group’s retail offerings are continuously reviewed to ensure they meet the needs of the entire local consumer spectrum.

Mushosho highlighted that the company is always looking for opportunities to improve merchandise execution and capitalise on emerging trends.

To ensure optimal performance in a challenging market, Edgars management is focused on right-sizing business overheads in line with demand.

He said the company will also maintain flexible credit offerings to encourage higher consumer spend.

Mushosho said expanding its geographic footprint remains   a key goal for the group.

“In fulfilment of this drive, we opened a new Edgars store at Ascot Shopping Centre in Bulawayo in March 2024 and a new Jet Store in Harare, at Hogerty Hill Mall.

To date, three Express Stores aimed at servicing the low-income segment of the market have been opened, selling only for cash.

A further five are in the pipeline before close of year. The business will strengthen its store power back-up capabilities to safeguard customer experiences and contain generator costs in the light of

projected reduced electricity availability in the outlook period,” he said.

He said smart merchandise procurement and optimal inventory planning remains a focus area for the company, ensuring that it maintains a well-managed merchandised cycle and achieves targeted margins without compromising quality.