Edgars banks on macroeconomic stability for Q4 performance improvement

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  • Significant improvement experienced in Q3 on prevailing stability
  • Q3 total unit sales were 1,5 million compared to 963 000 in the entire half year
  • Further bump in volumes expected in Q4

HARARE – Clothing manufacturer and retailer, Edgars Stores Limited says they expect a hike in demand for products in the fourth quarter of 2020 after witnessing a significant improvement in the third quarter (Q3’2020) on a quarterly basis underpinned by a jump in sales volume and revenues.

The macro-economic situation in the country showed signs of stabilising in Q3’2020 after a half year characterised by market volatility, inflation, local currency instability as well as COVID-19 which all had negative bearing on business.

Edgars operates three divisions namely the Edgars Chain, Jet Chain and Manufacturing.

In the quarter ended 4 October 2020, the group recorded a 36% overall decline in revenue in inflation adjusted terms against results for the same period in 2019 while the number of units sold declined by a million, coming down from 2.5 million in Q3 2019 to 1.5 million in the period under review.

This was however, a significant improvement on the performance for the entire first half of the year which saw the group only managing to sell 963 000 units from 1.6 million in the same period in 2019 mainly as a result of the COVID 19 induced lockdown.

Demand for the quarter also declined from 820 000 units last year to 585 000 units consequently slashing 20% off EBITDA for the quarter compared to the same period last year.

The Edgars chain recorded a 50% decline in unit sales to 453 752 against the same period in 2019 however, credits sales improved from 25% in the last quarter to 40% of total sales although remaining well short of the historical contribution to total sales of 70% to 75%.

The Jet Chain recorded 771 893 unit sales, down 43% for the period to date against 2019.

Of this Cash sales contributed 88% and credit sales 12% of total sales for Q3 compared to 91% and 9% respectively in Q2.

The Carousel manufacturing division however experienced significant improvement, recording a 143% improvement in unit sales for the period driven by Covid-19 masks in general and by the Edgars and Jet Chains’ summer stocking programmes.

Furthermore, the company reviewed limits for customers with a good credit record upwards resulting in debtors growing from ZWL$64 million at the end of June to $123 million at the end of September.

On top of macroeconomic stability, the group’s CEO, Tjeludo Ndlovu is also hopeful for improved diaspora remittances and reduced new COVID 19 cases, which will all have a positive effect on business.

“We expect the recovery observed in this quarter to continue into Q4 if the macroeconomic stability persists. Historically, the last quarter significantly outperforms the first three and accordingly we look forward to a strong performance. Key to achieving this will be good diaspora remittances and reduced new Covid-19 cases which will allow free movement of people,” said Ms Ndlovu

Furthermore, the group says they are launching online stores for the retail chains in time for the festive season trading period, complementing the pilot WhatsApp selling platform that is currently being offered in select stores.

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