OK Zimbabwe post decline in earnings on adverse impact of Covid-19

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  • Revenue down 2% to ZWL34.3 billion
  • Volumes for the year declined by 13% from prior year
  • Popular Grand Challenge promotion was suspended due to Covid-19 restrictions
  • Its resumption is expected to boost sales

HARARE – Ok Zimbabwe Limited, operator of top retail outlets, Ok Stores, Bon Marché and OKMart, in its full-year results statement ended 31 March 2021, said that the group revenue declined by 2% in inflation-adjusted terms to ZWL34.3 billion from ZWL35.0 billion the prior year.

Profit before tax of ZWL 2.0 billion was 42% below prior year’s of ZWL 3.4 billion, while profit after tax declined by 46% to ZWL 1.1 billion from ZWL 2.0 billion in prior year.

The period under review was affected by COVID-19, with lockdown restrictions in place throughout the period. The retail industry was among the worst hit sectors as government-imposed operation restrictions resulted in the loss of trading hours.

The Group’s chairperson Herbert Nkala said the lockdown measures negatively impacted business through supply chain disruptions and reduced consumer disposable incomes.

“The Group was also unable to hold its flagship promotion, the Grand Challenge,” he said.

“As a result, volumes for the year declined by 13% from prior year.”

By the half-year, volumes were below the prior year by 27%, and the full-year improved outturn is on the back of easing of the restrictions during the second half of the financial year.

Despite the relatively tough operating environment, the retail giant managed to pursue capital expenditure programs with refurbishments completed at OK Avonlea, OK Machipisa, Bon Marché Belgravia, Bon Marché Eastlea, OK Kadoma, OK Rusape and OK Hwange. Two new stores were opened, an OK store in Harare’s Sanganayi Inn area and an OKmart store in Victoria Falls.

“The refurbished stores and new branches were well received in their respective markets and made a significant contribution to the Group’s sales,” said Mr Nkala.

In monetary terms, capital expenditure for the year was ZWL1.2 billion down from ZWL1.5 billion in prior year with the larger chunk of it channeled towards store refurbishments and equipping the new stores.

This brought the Group’s total assets value to ZWL12.5 billion, up 25% from ZWL10.5 billion in the previous year.

Meanwhile, overheads grew by 6% over the prior year as the Group’s measures to curtail the spread of COVID-19 increased the cost base in addition to electricity charges, staff costs, cleaning costs, and security expenses.

The Group has declared a final dividend of 54 ZWL cents per share to be paid to the shareholders on or about the 1st of July 2021. The final dividend brings the total dividend declared for the year to 80 ZWL cents per share.

Going forward, Mr Nkala said that whilst the impact of COVID-19 on future operations remains uncertain, the Group’s financial status remains solid and mitigatory measures are in place to ensure continuity and viability of operations.

“The resumption of the Grand Challenge promotion in the current financial year is expected to underpin volume growth in the first quarter,” he said adding that the Group will also continue to pursue more innovative initiatives to grow market share profitably.

“The refurbishment and expansion drive will be reinforced, with a number of stores targeted for refurbishment and potential new sites under consideration.”

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