Edgars’ Jan quarter earnings improve, remains constrained year-on-year

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  • Q4 revenue growth across all segments
  • Tumbles 17% year to date
  • COVID-19 dampens prospects for Q1 FY2021

HARARE – Clothing manufacturer and retailer, Edgars Stores limited reported revenue growth across all business units during the fourth quarter ended 10 January 2021 (Q4 FY2020), driven by strong sales during the festive season.

According to the group, the availability of merchandise, improved civil servants’ salaries, year-end bonuses and an enhanced credit o­ffering to customers contributed positively to this growth.

Edgars which operates famous brands such as Edgars Chain stores, Jet Chain, and Carousel manufacturing, also highlighted its year to date financials dragged by the increasing cost of doing business due to volatile economic environment characterised by liquidity constraints, high cost of borrowings, COVID-19 challenges as well as generally low disposable incomes.

Year-to-date turnover for the trading period to 10 January 2021 was down 17% in inflation-adjusted terms in line with a decline in units sold to 2.4 million from 3.4 million in the same period last year.

Group chief executive officer, Tjeludo Ndlovu said demand for the quarter declined to 995 000 units from 1 224 000 units last year but was up from 585 000 units in the 3rd quarter.

“Resultantly, inflation adjusted EBITDA was down 6% compared to the same period last year,” said Mr Ndlovu.

Only Carousel Manufacturing registered an increase in sales for the year coming in 32% above the prior year. Edgars Chain’s year-to-date unit sales of 888 000 were down 36.5% compared to the same period in 2019 while Jet Chain’s unit sales were also down 29% to 1.3 million.

On the Financial Services front, the group reviewed customer credit limits upwards during the last quarter, leading to an increase in the gross debtors’ book from ZWL$123 million at the end of September to ZWL$428 million at the end of the December trading period.

Resultantly, interest income grew 32% year on year while active accounts firmed in response to the favourable credit terms, increasing to 41% of the total number of accounts from 32.9% as of the 3rd quarter.

Likewise, the microfinance loan book increased 6% in inflation-adjusted terms to ZWL$30.5 million as at end of the December trading period while interest income also grew 62% in inflation-adjusted terms from Q3 on the basis of the bigger book written and firm interest rates.

Commenting on the outlook, Mr. Ndlovu said the ongoing lockdown has denied business two months of normal trading, and this has severely constrained prospects for Q1 of FY2021.

“The business has responded through online store sales and WhatsApp trading – although volumes remain relatively low,” he said.

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