Harare – Zimbabwe Stock Exchange (ZSE) listed fast foods operator, Simbisa Brands reported a significant fall in customer counts during the first quarter ended 30 September 2019 (Q1 FY2020) largely driven by the ongoing macroeconomic challenges in the Zimbabwe market.
The volatility in the Zimbabwe economy characterised among others by spiking inflation and foreign currency shortages has seen gross loss in consumer disposable incomes, thus limiting purchasing power.
The Group recorded an overall 28% decrease in customer counts compared to the same period last year, while revenue for the period increased by 455% driven by a 676% year-on-year increase in average spend.
Average spend in Zimbabwe during the period under review increased by 480% year-on-year; however, as salaries significantly lag inflation, erosion of customer spending power resulted in a 40% year-on-year decline in customer counts in Zimbabwe compared to the same period last year.
The Zimbabwe operations’ revenue grew 249% year-on-year whilst the regional operations achieved 9% year-on-year growth in US Dollar revenue driven by a 6% increase in customer counts and a 3% increase in US Dollar average spend in Q1 FY2020 versus prior year.
“On conversion to Zimbabwe Dollars, this translated to a 1003% year-on-year increase in regional turnover in Q1 FY2020 versus the same period last year,” Group Chief Executive Basil Dioniso said in a statement.
“The Group has responded in the Zimbabwe market by introducing a range of value meals, increasing promotional and marketing activity and maintaining an optimal pricing strategy to maximise value to its customers whilst taking careful measures to preserve margins.”
Simbisa largely known for its flagship Chicken Inn and Bakers Inn brands, has operations in Zimbabwe, Zambia, Kenya, Ghana, DRC, Malawi, Namibia, Botswana, Mauritius, Swaziland and Lesotho.
The Group’s regional markets performed well benefiting from stable domestic operating environments.
Mr Dioniso said that the regions’ contribution to Group performance continues to grow in line with the Group strategy.
During the period under review, Simbisa opened 6 counters in Zimbabwe while it also successfully launched Rocomamas brand in Zambia with the inaugural store opening on the 19th July 2019.
“Two counters were closed in Namibia and one in Mauritius resulting in 4 net store openings in the Quarter,” Mr Dioniso said.
“Simbisa closed the Quarter with 464 counters in operation.”
Basic earnings per share in the period under review were 294% higher compared to the corresponding period last year.
On the outlook, Mr Dioniso expressed that the Group has a healthy capital expenditure pipeline for FY2020 and will continue to expand its footprint and defend its market share through the opening of new counters across all of its markets.
He said the Group intends to open 21 new counters over the next six months, with 10 of those to be opened in Zimbabwe and 11 counters in the region.
“Despite operating challenges in Zimbabwe, careful and proactive management strategies as well the growing contribution from the regional business leaves Simbisa Brands Limited on course to meet our expectations for the half year ended 31 December 2019.
“We have put in place measures to ensure that we have adequate working capital for the upcoming festive season and going into 3Q FY2020,” he said.
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Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment. He can be contacted through the following email links, firstname.lastname@example.org and email@example.com.