Listed clothing retailer, Edgars Stores Limited swung into loss of ZWL$177m for the 53 weeks to January 10, 2021, from a profit of ZWL$80m reported in prior comparative period due to the impact of Covid-19 pandemic and value distortions caused by aged stock , Business Times can report.
Revenue for the group declined 23% to ZWL$2.1bn from ZWL$2.7bn achieved in the previous year.
Units sold declined by 1m to 2.4m from 3.4m in the prior comparative period.
“Material disruptions stemming from Covid-19 lockdown restrictions had a significant impact on the Group’s performance, most significantly in April to May 2020 and in the last week of the 2020 trading period. The business consequently lost 1m units in sales compared to the 2019 year. This demonstrates the significant impact on business continuity that lockdowns may have in the future,” Edgars chairman, Thembinkosi Sibanda said.
“As reported last year the business closed the 2019 financial year with a lot of aged stock which when indexed had the unfortunate effect of distorting the value of cost of sales by significantly reducing the gross profit margin.”
Volumes for the group declined to 2.4m from 3.4m in the prior comparative year.
Edgars balance sheet shrunk to ZWL$2.3bn from ZWL$2.6bn.
Trading in foreign currency since April 2020 has allowed retail chains to improve stock assortments, which in turn has improved the number of feet in our stores.
The business introduced an in-store remittance agency, where diaspora remittance beneficiaries collect their money from selected branches.
The selected stores have recorded improved foreign currency sales.
Sibanda said gearing increased to 0.20 in the reviewed period from 0.19 in 2019.
The business did not have any significant foreign liabilities as at January 10 2021. Total sales for the Jet chain were ZWL$896m from ZWL$981m in 2019. Units sold for the year were 1.28m from 1.80m in 2019.
The factory recorded turnover of ZWL$285m from ZWL$204m.
The sale of face masks and other personal protective equipment contributed significantly to this performance.
The gross retail debtors’ book closed the period at ZWL$431m compared to ZWL$423m as at the end of 2019 trading period.
Sibanda said the credit environment remained challenged by high inflation, making value preservation very difficult.
He said credit losses increased during the lockdown period to 2.2% from 1.1% of the debtors’ book at January 2021.
The microfinance loan book, like the retail book, faced similar challenges in value preservation.
The loan book closed at ZWL$30.3m from ZWL$28.9m during 2019.
Going forward, Edgars management continues to remodel the business to capitalise on opportunities that arise in the very uncertain operating environment.
Sibanda said available foreign currency will be used to improve merchandise ranges and assortments to grow turnover whilst at the same time escalating efforts to manage operational costs.
The company is retooling its manufacturing unit to enhance its capacity to supply the retail chains and cater for external customers and export sales.
Edgars will be opening two new stores in the first half of 2021 and are looking for compelling locations to grow the company’s footprint.
The online stores are fully operational for both Edgars and Jet, whilst Club Plus microfinance online loans uptake is growing underpinned by robust promotional activities to boost awareness.
The company did not declare dividends and the cash flows will be channelled towards growing the business.