- Profit for the half year was ZW$65.15 million
- COVID-19 lockdown affected January, February and two last weeks of June trading operations
- Lockdown restrictions also necessitated increased borrowing
Harare – Despite losing sales in the January, February and June trading months owing to COVID-19 lockdown restrictions, clothing manufacturer and retailer, Edgars Stores Limited remained profitable with an inflation-adjusted profit of ZW$65.15 million for the half-year ended 11 July 2021.
The profit was however 12% down compared to ZW$74.39 recorded in the same period last year.
“The trading environment for the first six months was significantly impacted by the Covid-19 lockdowns in January, February and the last two weeks of June. The Company is not designated as an essential service provider and as a result, lost close to seven trading weeks due to store closures and reduced trading hours.
“Notwithstanding the challenging environment, positive business sentiment, stable interest and exchange rates, and a lag in inflation ensured that our financial services business units continued to perform and remain profitable over the period, ably sustaining operations,” chairperson, Thembinkosi Sibanda said in a statement accompanying the Group’s half-year results.
Sibanda added that the Group resumed normal trading hours up to 7 pm in September and sales are slowly recovering off the low base experienced over July and August.
The impact of the lockdown restrictions also necessitated increased borrowing which was at an average rate of 44.4% per annum up from 43% per annum in 2020 in order for the business to service ongoing commitments such as occupancy and utility costs, as well as ensuring that our employees were remunerated on time.
During the six months, gross profit margins improved to 465 from 42% last year driven by fresh inventory assortments and increased imports.
Edgars which operates famous brands such as Edgars Chain stores, Jet Chain, and Carousel manufacturing, highlighted that Edgars chain’s unit sales were 6% down to 344 249 with credit sales constituting 68.1% of the total sales.
The Jet Chain unit sales of 526 691 were up 1% with credit sales making 46.5% of the total sales up from 40.9% at the end of the first quarter.
In the financial services sector, finance income was up 249% year-on-year despite interest rates having been reviewed downwards over the period while the debtors’ book increased to ZW$639 million in June 2021 from ZW$519 million in June 2020.
“The book performance remains healthy, with 86.3% (2020: 67.4%) of the book being current, compared to 84.9% in Quarter 1. Active accounts at 37.4%, while stable throughout the year, declined relative to the prior year (June 2020: 44.6%),” Sibanda said.
The Carousel Manufacturing unit sales declined to 74,021 from 121,093 units in 2020 resulting in lower efficiencies relative to last year. The factory secured its first export sales to the region in this quarter and management continues exploring export markets for more opportunities.
The Group opened two new stores, Jet Kwame Nkrumah in Harare and Jet Mutoko in April and August 2021 respectively and are looking forward to the opening of Edgars Avondale and Jet Hwange in October this year.
Going forward, the Group is confident that the profit forecast will be met as they pin hopes on maintained improvement in trading in the chains which saw a significant improvement since the relaxation of the lockdown with an increase in customer footfall.
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