Harare – Clothing retail outlet Edgars Stores Limited’s sales volumes slumped in the 26 weeks ended 7 July 2019, capping a difficult operating period characterised by currency volatility and supressed consumer spending due to depressed salaries purchasing power.
In a statement accompanying the Group’s financials for the period under review, Group chairperson Themba Sibanda said the business recorded negative unit growth, with only April and May performing positively in unit terms.
“In June, positive performance was again negatively affected by the introduction of mono currency.
“Cumulatively, units for the first half declined by 17%,” Mr Sibanda said.
The Group’s turnover increased by 96% to $62.9 million compared to $32.1 million recorded in the same period last year, largely a function of inflationary driven pricing.
Group inventory increased by 123% in value, however, in unit terms the chains were holding less stock than last year.Profit after tax for the period increased by 594% to $13.6 million from $1.9 million in the same period last year.
“The business benefited from a leaner structure, cost inflation that was trailing top line inflation and pre-emptive stocking arrangements,” Mr Sibanda said.
“Other gains and losses include exchange gains of $2.7m (2018: $60k loss).”
The Edgars chain stores recorded turnover of $37.6 million against $19.5 million in the same period last year, which is an increase of 93%.
Units sold decreased by 25% from 0.8 million last year to 0.6 million in the review period, whilst the chain’s profit to sales ratio increased to 36.8% from 23% in 2018.
Meanwhile, Jet Chain’s total sales recorded an increase of 91% to $23 million from $12 million last year, whilst units sold typically declined by 17% from 1.048 million sold in the comparable prior year to 0.87 million in the period under review.
“The chain’s profit to sales ratio increased to 30% (2018:16.7%),” Mr Sibanda said.
The Group reopened Jet Kadoma in April 2019, whilst Edgars Kadoma is scheduled to reopen before the end of year.
Mr Sibanda said the factory made a profit of $1.9 million up from $0.3 million last year, of which 6% of sales were exports.
The microfinance business revenue increased from $0.5m to $1.8m, making a profit before tax of $1m compared to $60k in the previous year.
Loans to customers were up 37% to $5.9m compared to $4.3m in the same period last year.
On the outlook, Mr Sibanda said the Group also plans to open two new Jet stores in Banket and Chegutu.
“With the investment in merchandise and increased trading space, management is confident that they will deliver profit growth in the second half,” Mr Sibanda said.
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