CLOUDINE MATOLA
The board of directors of Edgars Stores Limited, a publicly traded apparel retailer, have approved the plan to delist the company from the Zimbabwe Stock Exchange (ZSE) and migrate to the Victoria Falls Stock Exchange (VFEX), Business Times can report.
However, both regulatory and shareholder authorization are required for this.
Launched in 2020 as an offshore-focused financial service centre, VFEX is a subsidiary of the ZSE and is a market exchange denominated in United States dollars.
The establishment of the VFEX is part of the government’s attempts to draw in foreign investment, boost confidence among international investors in the nation’s capital markets, and assist businesses in raising foreign exchange.
The development was confirmed by Edgars company secretary, Chipo Mafunga, yesterday in a notice to shareholders and the investing public.
“The directors of Edgars Stores Limited wish to advise all shareholders and the investing public that the board, subject to shareholder approval and the granting of all necessary regulatory authorisations, has approved the delisting of the company from the ZSE, immediately followed by its listing on the VFEX. Further details of the transaction will be provided to shareholders once all regulatory processes have been finalised. Shareholders are therefore advised to exercise caution and consult their professional advisers when trading in the company’s shares,” Mafunga said.
Government has come up with various incentives in order to promote listings on VFEX and this should be complemented by increased productivity and investment.
Additionally, investors who participate on the VFEX benefit from the ability to move their capital and dividends in and out freely , low transaction costs, tax incentives that include a 5% dividend withholding tax for foreign investors and exemption from capital gains withholding tax for all investors and minimal currency risk.
Edgars Group CEO Savious Mushosho stated in a trading statement for the nine months to October 8, 2023, that the group performed exceptionally well in the third quarter, earning unit sales of 649,788, which was 28.5% more than the same period in the previous year , which had 505,531.
However, Mushosho said 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.”
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 2022, 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).
