Edgars reports 23% sales decline in FY2020

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  • Gross margins were also impacted in line with the lost sales particularly during the last quarter
  • Profit after tax for the period was ZWL$17.9m, an 81% decrease from ZWL$91.8m in the same period last year
  • “Post Covid-19, clothing retail will not be the same and the Group is pursuing various initiatives to future proof the business”

Harare – Clothing retailer, Edgars Stores Limited reported a 23% decrease in units sold during the year ended 5 January 2020, as the retail sector like many other businesses is faced with an overhanging effect of inflation which in turn has subdued consumer demand.

Gross margins were also impacted in line with the lost sales particularly during the last quarter.

The Group’s turnover decreased by 5%, from ZWL$ 629m in the previous year to ZWL$ 595m in the current year.

“Revenue performance for the last quarter, usually our peak turnover period, performed below expectation mainly due to subdued consumer spending in general and challenges with mobile payment platforms,” the Group’s Chairperson Thembikosi Sibanda said a statement accompanying the financial results.

Profit after tax for the period was ZWL$17.9m, an 81% decrease from ZWL$91.8m in the same period last year.

The Edgars Chain store segment recorded a turnover of ZWL$390 million out of 26 stores compared to ZWL$245 million recorded last year out of 25 stores, representing an increase of 6%.

Units sold for the year were 1.399 million, 19% lower than 1.736 units sold in the prior year. The chain’s profit to sales ra􀆟o declined to 24.1% from 27.3% in 2018.

Total sales at Jet Chain stores declined by 10.8% to ZWL$218.7 million out of 27 stores from ZWL$245 million recorded in the previous year out of 25 stores.

Units sold for the year were 1.797m, a decrease of 27.6% from 2,483 million last year while the Chain’s profit to sales ratio also declined to 19.6% from 22.8% in 2018.

Meanwhile, the Group’s manufacturing segment made an operating profit of ZWL$12.6 million compared to a loss of ZWL$1.8 million last year. Of this, 6% of sales were exports (2018: 8%) while 94% (2018: 92%) were made to the Edgars and Jet chains.

The microfinance business revenue declined marginally to ZWL$12.4m from ZWL$12.8m, making a profit after tax of ZWL$924k down from ZWL$5.2m recorded last year while loans to customers declined by 76% to ZWL$6.5 million from ZWL$27.1 million last year after an allowance for credit losses of ZWL$0,05 million, 90% lower than ZWL$0.5 million in 2019.

On the outlook, Mr Sibanda said the tough operating environment, in particular, The Covid-19 pandemic, hyper inflationary environment, liquidity challenges and foreign currency shortages continues to impact negatively on the Group’s growth strategy.

“Management will continue to devise adequate survival strategies to preserve the Group’s balance sheet.

“Post Covid-19, clothing retail will not be the same and the Group is pursuing various initiatives to future proof the business,” Sibanda said.

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