- OK reported a 36% decline in volumes and revenue for Q3 2024 compared to the same period in 2023
- Stringent payment terms for Zimbabwe Gold (ZiG) purchases and credit limitations on foreign currency purchases, impacted stock availability
- Four branches in Harare closed (Kuwadzana 5, Glen Norah, Chitungwiza Town Centre, and Robson Manyika Street)
Harare-The largest retail outlet in Zimbabwe, OK Zimbabwe Limited, has reported a 36% decline in volumes for the third quarter ended 31 December 2024 while revenue also decreased by 36% compared to the same period in 2023.
This decline was attributed to low stockouts emanating from restricted supplies from manufactures.
The company faced stringent supplier payment terms on Zimbabwe Gold (ZiG) denominated purchases as well as and credit limitations on foreign currency denominated purchases impacting stock availability and hence the sales volumes.
‘’These stockouts arose from restricted supplies from manufactures and distributors’’, the group said in a trading update.
The group had an outstanding and overdue creditors balances which were predominantly denominated in US Dollars against a backdrop of low US Dollar sales collection yet their sales volumes in US dollar fail to reach 20%.
The low stocking levels reflects a direct manifestation of sub economic pricing arising out of exchange rate distortions and suppliers’ needs for foreign currency invoicing to cover their operational and raw materials needs.
The increasing presence of informal retailers has created an uneven competing ground on pricing due to regulatory fees that are charged on formal retailers while the enforcement of these fees is not equally distributed to informal retailers.
This has led to formal retailers recording a recession in customer count due to unfavourable pricing compared to the informal sector.
The presence of informal retailers has also led to a reduced preference for formal retailers among suppliers, as informal retailers offer cash payments in US dollars for supplies, while formal retailers are invoiced in local currency.
This is because a high flow of their customers mainly buys in local currency, as they are mandated to accept every legal tender in the country.
meanwhile, power outages worsened during the period under review resulting in disruptions in business operations and increases in operating costs as the business relied on importing generators for backup.
As part of mitigating the rising operating costs the group closed four Harare branches in Kuwadzana 5 ,Glen Norah, Chitungwiza Town Centre and Robson Manyika Street.
Looking ahead, “The business has began the operating units with support from supplier partners, as well as financial institutions that continue to assist with short- term funding structures.’’
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