Inflation headwinds expected to persist
Sales volumes grew by 1%
Sales values increased by 40%
Harare - OK Zimbabwe has called for the introduction of a foreign exchange pricing system that is market-determined and stable in light of the prevailing inflation headwinds and exchange rate disparities which are affecting business operations.
In a trading update for the quarter ended 30 June 2022, the Group said the willing buyer willing seller interbank market exchange rate against which formal businesses are required to benchmark pricing is not as attractive as the rates offered in alternative unregulated markets and this continues to impact the competitiveness of our USD prices, impacting foreign currency collections.
“Inflation headwinds are expected to dominate the trading environment in the short term. The market desperately needs a foreign exchange pricing system that is market-determined and stable,” the Group said.
According to the Group, inflationary pressures that gathered momentum at the end of the last financial year have persisted, with month-on-month inflation for June 2022 increasing sharply to 30.7% from 21% in May 2022 while year-on-year inflation for June 2022 was reported at 191.6%, a significant increase from 72.7% reported at the end of the last financial year.
During the quarter under review, OK Zimbabwe’s sales volumes grew by 1% against the prior year whilst inflation-adjusted sales values increased by 40%.
The Group highlighted that profit margins are consistent with the prior year and in line with the Group’s plans for the current year.
Meanwhile, the Group re-opened the Bon Marché Mt Pleasant store in July 2022 with refreshed and upgraded facilities in line with its refurbishment program.
“The business will upgrade more stores and also implement strategies to increase the footprint and grow market share during the year,” OK Zimbabwe said.
The Group noted that despite market-wide liquidity challenges, the business remains on sound footing and has in place measures to cover not only all working capital needs but also planned capital expenditure in line with its G.R.O.W.T.H strategy.
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