OK Zimbabwe weighs US$10.5m capital offers
SAMANTHA MADE
OK Zimbabwe Limited, the country’s largest retailer, is weighing offers for a capital injection valued at US$10.5m, a move seen as critical to reviving operations and stabilising its position in a turbulent retail environment.
Once a dominant household name, the retailer is under immense pressure to reposition itself against fast-rising informal traders, dwindling consumer spending, and persistent structural weaknesses in Zimbabwe’s economy.
Board Chairman, Hebert Nkala, confirmed that proposals had been tabled, with the board evaluating which option offers the best long-term value for shareholders while securing the company’s immediate financial health.
“A rights issue exercise was successfully concluded in July 2025 and US$20m proceeds received in August 2025,” Nkala said.
He added: “The capital raise plan of US$10.5m through the sale of immovable properties is in progress, with offers received in August 2025 currently under consideration.”
The disposal will involve supermarket buildings on a sale-and-leaseback basis, a strategy Nkala said was essential to ensure the retailer retains its strategic store footprint.
“Some of the funds raised will be applied to settle part of the company’s debt and this is expected to unlock supplier credit support for restocking,” Nkala noted.
“The Board and management’s initial focus has been to stop the decline in performance and financial distress and to steer the business back to stability, profitability, and long-term sustainability.”
He stressed that restructuring efforts were already underway: “The process of restructuring the company for survival and growth has already started to ensure proper management of debt to avoid insolvency, it operates with an appropriate organisational structure, efficient operations and that it adapts to changing market conditions.”
Staffing and morale remain critical. Nkala admitted that during the company’s decline, “retail skills were lost as trained and experienced personnel left employment for better opportunities.” He emphasised retraining and reacculturation of staff as essential to raising customer service and performance standards.
Looking ahead, Nkala said, “Cost optimisation and in-store as well as online sales strategies will remain central to achieving and sustaining the required growth. The recovery of the company has started, but it will take some time to return to normal operations. The Board and management are confident that with proper focus and diligence the ultimate goal of delivering consistent shareholder returns in the medium term is attainable.”
Already, shareholders have rallied behind the retailer. In July, they poured in US$20m through a rights issue, almost fully subscribed and underwritten, in just two weeks. Not a bailout. Not state intervention. But direct support from investors backing management’s turnaround plan.
That cash formed the first phase of a US$30.5m rescue package. The second phase hinges on raising US$10.5m through property disposals, with survival—not growth—the immediate priority. The funds are earmarked to pay down debt, restock shelves, keep lights on, and buy the retailer time.
The urgency is underscored by collapsing revenues. The group’s topline plunged 53% to US$240m for the year ended March 31, 2025, from US$511m in the prior year.
Management blamed supply chain disruptions, an unstable exchange rate, liquidity shortages, and intensifying competition from the informal sector. Exchange controls worsened the situation, distorting pricing and leaving suppliers hesitant to deliver stock without upfront payments.
While overheads fell 51.21% thanks to cost-cutting measures, the revenue collapse outpaced savings. Only fuel, repairs, and maintenance costs rose—driven by relentless generator use amid rolling blackouts.
The company also booked a US$10.3m impairment after a review showed some cash-generating units carried values above recoverable amounts. A net exchange gain of US$13.5m, from remeasurement of monetary liabilities, offered some relief, but not enough.
Ultimately, OK Zimbabwe posted a loss of US$29.6m for the year. Negative cash flows forced capital expenditure to be capped at just US$0.9m, a far cry from what the retailer requires to modernise operations and compete.
For now, survival rests on closing the US$10.5m property deals—and on the patience of shareholders betting that Zimbabwe’s largest retailer can claw its way back from the brink.
