High interest rates hit Edgars

RYAN CHIGOCHE

Clothing retailer Edgars Stores Limited says the interest rates hike adversely affected the company’s operations in the six months to June 30 2022.

The Reserve Bank of Zimbabwe governor, John Mangudya, in June hiked interest rates to 200% from 80%.

“The interest rate hike announced at the end of June impacted our credit offerings as we depend on ZWL$ borrowing to finance the credit that we extend to our customers,” Edgars CEO, Tjeludo Ndlovu said.

“To mitigate the impact of this increase on the business profitability we reluctantly passed the rate increase to customers.”

She also said Edgars also introduced US dollar accounts in July this year in its retail chain and US$ loans through its microfinance subsidiary. The two have been well received by customers, Ndlovu said.

She said the group realised significant growth and improvements across its units in the reviewed period.

Ndlovu also said the remittance agency business, which the group operates through strategic partnerships, continued to grow.

In the retail chain the group added three new outlets and two jet stores in the capital Harare and one in Gutu.

A number of existing stores have been identified for renovations in this second half of the year.

On the group’s trading performance for the period to June 2022, Ndlovu reported that performance was afflicted by the supply constraints arising from input costs and economic uncertainty.

However,  she added that the group managed to build on the growth realised from the previous years despite the rate being slowed down by economic shocks.

Ndlovu was buoyant saying the company will weather the headwinds and realise significant sales growth across all business units.

“The continuing challenges in the trading environment have impacted consumer spending and suppressed volumes and revenue in the industry. The group continues to grapple with high costs as well as supply constraints. While these challenges cannot be ignored we believe we are well placed for the rest of the year with strong forward sales across all the businesses and growth focus strategy,’’ Ndlovu said.

She added: “We expect our full year performance to reflect our usual increase in trading momentum as our year progresses into summer.”