• Edgars invested US$1 million in its Carousel Manufacturing division
  • The investment aims to maintain and expand production capacity in a challenging economic environment
  • The informal sector, including street vendors and "runners," commands an estimated 60% of retail trade, exacerbating challenges for formal retailers

Harare-Edgars Stores Limited, Zimbabwe’s largest clothing listed on the Victoria Falls Stock Exchange has  invested  US$1 million in its Carousel Manufacturing division according to the group’s latest financial statement  for the 52 weeks ended 5 January 2025.

This strategic infusion, aimed at maintaining and expanding production capacity, comes as the company navigates a challenging economic environment marked by shrinking consumer spending, hyperinflation, and intense competition from the informal sector’s “runners” selling low-cost clothing.

‘’The Group invested US$1.0 million in maintaining and expanding production capacity during the period, mostly towards automatic sewing machines, surface printers, boiler replacement and embroidery machines,’’ Group’s chairperson Themba Sibanda said.

Founded in 1946 by Sydney Press, Edgars Stores has grown from a single store in Bulawayo to a retail powerhouse with a network of 28 Edgars stores, 25 Jet stores, and six newly launched Express Stores across Zimbabwe.

Zimbabwe’s retail landscape, however, is under siege with the informal sector comprising street vendors and “runners” selling cheap clothing commanding an estimated 60% of retail trade.

This, coupled with a tight economic environment driven by hyperinflation and  currency devaluation has slashed disposable incomes.

According to the financial statement , consumers are prioritising food security over discretionary purchases like clothing, leading to a 15.6% drop in group units sold, from 2.36 million to 1.99 million, and a 9.1% revenue decline to US$30.7 million from US$33.7 million in 2023.

In retail, total merchandise revenue amounted to USD30.7 million representing a 9.1% decline over the prior year with ZWG credit sales contributing 11.8%, while the USD credit sales contributed 71.9%.

In response to these challenges the company invested in  its in-house production arm on automatic sewing machines, surface printers, boiler replacements, and embroidery equipment that boosted production by 58.2%, with units rising from 194,000 to 305,000 in FY2024.

This expansion has increased locally produced merchandise to 70% of Edgars’ stock, up from 50% the previous year, reducing reliance on costly imports in a dollarized economy where foreign currency liquidity is scarce.

However turnover fell 5.3% to US$17.2 million, with units sold dropping 13.8% to 0.87 million. Jet stores, targeting a broader market, experienced a steeper 13.57% revenue decline to US$13.4 million, with units sold down 16.9% to 1.11 million, partly due to a strategic realignment set to conclude in 2025.

In a bid to counter the informal sector’s dominance, Edgars launched Express Stores in late 2024, targeting low-income consumers with cash-only clothing priced between US$1 and US$10.

Six stores have opened, including one at Hogerty Hill Mall in Harare, with four more planned by FY2025’s end.

Edgars’ financial services arm, including its retail debtors’ book and Club Plus Microfinance, remains a critical revenue driver. The US dollar debtors’ book closed at US$11.6 million, down 7.4% from 2023, reflecting a drop in active accounts from 88,200 to 81,300 as consumers reduced borrowing amid economic strain.

Conversely, the Zimbabwe Gold (ZiG) debtors’ book surged 602% to ZiG3.99 million, driven by growing dollarization and high ZiG interest rates. Asset quality stood at 77.4% for the USD book but a weaker 37.4% for the ZiG book, impacted by a September 2024 currency devaluation.

Club Plus Microfinance maintained a robust 93.2% loan book quality, closing at US$1.7 million. With additional funding expected in FY2025, the division is poised for growth, focusing on low-risk USD loans.

Looking ahead, remains optimistic, doubling down on its strategy: expanding Express Stores, refining retail offerings, and further retooling Carousel. Investments in solar power aim to mitigate electricity costs, while cost-containment measures, including headcount rationalisation, target operational efficiency.

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