Tinashe Makichi
HARARE – Zimbabwe Stock Exchange listed retailer, OK Zimbabwe (OKZ.zw) is looking at the possibility of bringing in a technical partner to ward off competition. This comes as the entry of big regional players such as Pick ‘n’ Pay, Choppies and Food Lovers has made the retail sector highly competitive.
OK Zimbabwe chief executive Alex Siyavora told Business Times on the sidelines of the retailer’s analyst briefing that securing a technical partner remains part of the plans.
“Going forward, we are considering a technical partner to match our competition. This arrangement will entail transfer of skills and technology among other business fundamentals. As you can see Pick ‘n’ Pay is taken, Choppies is already in the market and doing well.
“Shoprite was once in the market in Bulawayo but moved out due to various reasons. At some point we had discussions with them over a possible joint venture. However, we are considering engaging other partners from the region,” said Siyavora.
He said a lot of investment is currently being put in place to make sure the retail giant moves in line with current market dynamics. Siyavora said OK Zimbabwe will invest close to $15 million as capital expenditure towards expansion and refurbishments.
Capital expenditure for the year was $15,5 million, up from $10,9 million in prior year as the retail group continued with its refurbishment exercise to improve existing facilities as well as expand its trading footprint.
OK Zimbabwe says the country’s retail sector remains competitive despite the informalisation of the sector, foreign currency shortages and restrictions on imports.
The country is struggling with a debilitating foreign currency crisis, blamed on a collapsed productive base, widening trade gap and diminishing foreign capital flows and this has resulted in government imposing import restrictions.
Siyavora said the economic outlook is encouraging as Government is putting emphasis on economic resuscitation and growth.
“The group plans to continue improving profitability through growing sales and managing its costs. Refurbishment work will be carried out on a number of stores and expansion is planned in identified areas where the Group presently is inadequately represented,” he said.
The current plans by OK Zimbabwe come on the back of a much improved financial performance with the retailer recording a 23,4 percent growth in revenue to $582,9 million for the year to March 31, 2018 from $472,4 million in the prior year.
Profit before tax of $23,6 million of the retailer during the period under review was 165,6 percent up on prior year’s $8,9 million, while profit after tax increased 174,6 percent to $16,6 million from $6,1 million in prior year.
OK Zimbabwe’s overheads growth was restricted to 16,6 percent which is below the revenue growth of 23,4 percent. Increases were attributable to, among others, staff costs, utility charges, bank charges and rentals. The cost lines that increased significantly were those corresponding directly with sales generated.
The group operated free of debt during the year as internally generated funds were adequate for working capital and capital expenditure requirements.
