BUSINESS REPORTER
Edgars Stores Limited, a publicly traded apparel retailer, saw a 28.5% increase in sales in the third quarter (Q3) to 649 788 from 505 531 in the prior comparative period.
In a trading update for the nine months to October 8, 2023, Edgars Group CEO, Sevious Mushosho , said the economic environment was relatively stable in the period under review, citing the government’s prompt interventions.
It comes at a time when Zimbabwe clothing retailers have faced pressure mostly as a result of declining consumer spending.
“The group did exceptionally well during the third quarter achieving unit sales of 649,788 which was 28.5% up from the same period last year which had 505,531.
However, cumulatively for the nine months to 08 October, the unit sales were 2.4% below last year due to the currency instability experienced in the second quarter which saw customers losing a significant part of their buying power especially the civil servants who are 35% of our business,” Mushosho said.
He said liquidity continued to be a challenge with most banks struggling to fulfil drawdown requests but this trend improved towards the end of the quarter .
According to Mushosho, despite economic difficulties, clientele improved over the period under review.
“As at October 8, borrowings closed at US$5.4m up from US$4.9m in Q2 and ZWL$3bn compared to ZWL$3.4bn as at end of the second quarter, with the average cost of borrowing for ZWL$ at 107.99% per annum compared to 89.35% per annum in June 2023 while the US$ average cost of borrowing was 13.39%.
“The group had US$125,456 in foreign liabilities which it can service from existing resources,” Mushosho said.
With 260,043 units sold in the third quarter of last year, the Edgars chain saw a 39.7% increase in sales.
Nonetheless, chain unit sales for the nine months ended October 8 were, on average, 2.16% lower than the same period in 2022 (718,768 vs. 703,253).
Revenue for the nine months was up 43.99% relative to the same period last year.
Credit sales constituted 63% of total sales compared to 54% in the same period last year.
According to Mushosho, the Jet chain sold 334,910 units in the third quarter, an increase of 18% over the 283,877 units sold in the same period last year.
Nonetheless, overall chain unit sales for the nine months ending on October 8 were 4.10% lower than those of the previous year .
Credit sales made up 60% of the total sales for the quarter compared to 49% in the same period last year. Stock cover closed at 10.6 weeks (2022: 12.46 weeks).
The ZWL$ book reduced to ZWL$2.67 bn from a December 2022 balance of ZWL$2.85bn while the US$ book grew 50.0% on the December 2022 balance to close at US$9.5m.
He said the debtors book performance remained healthy, with 80.6% of the ZWL$ book being current compared to 72.4% in September 2022 and 61.5% in December 2022 while 82.2% of the US$ book was current at the close of the quarter down from 90.4% as at December 2022.
The manufacturing business achieved a growth in sales units of 54.6% to 54,835 in the prior year during the quarter under review.
Cumulatively, unit sales were up 17.6% to 122,789 (2022: 104,405).
This was achieved through giving focus to local production to achieve exclusivity and high quality.
“There are plans to acquire more machines including a laser Cutter to improve efficiencies, increase production capacity and reduce cost of production. At the end of September 30, the factory had enough stocks of raw materials to meet the increased demand from the chains. Orders for more fabric were placed to cover a 12 months of production for all the product ranges. There are plans to produce for the South African market in the coming year,” Mushosho said.
The United States dollar loan book closed the quarter at US$1.14m up 3.6% on December 2022 balance of US$1.1m while the ZWL$ loan book decreased by 92.1% to ZWL$22.60m from ZWL$285.55m in December 2022.
The United States dollar book was 75% in current at the end of the period, compared to 82.1% at end of December 2022.
