OK Zimbabwe sees full-year profits remaining largely in line with last year as the group hopes to get a lion’s share of the market and capture retail consumer spend, CEO Willard Zireva.
Speaking on the sidelines of the listed retail company’s analysts briefing for the halt-year to September 2013 in the capital this week, Zireva said they wanted to improve profitability, but conceded this would be a “tall order.”
He said consumer spend for the month of October was flat and would not be drawn to comment or give an indication of how the company had fared this month given that the month still had two weeks left.
In his presentation to analysts and journalists, Zireva jokingly said he was hoping government would award civil servants bonuses. Naturally, this would spur retail sales as disposable incomes improve, he reasoned.
“October was flat, largely the same as last year. November is too early to assess as there is a lot that can still happen. The economy is stagnating at the moment.
Our view is that the economy will continue to go down until we get some meaningful cash injection in the form of Foreign Direct Investment, loans or grants. Once you get a cash injection, this will kick start the economy. Currently consumer demand is not what it used to be,” Zireva said.
“We have set ourselves a target to achieve (profits) we achieved last year. It will be difficult but we will give it our best.”
He said OK Zimbabwe would focus on market share growth and getting the lion’s share of market spend.
Zireva warned of tough economic times for the country.
He said: “We don’t see the liquidity problem being resolved in the short-term. We should brace ourselves for a pretty difficult time.”
However, on a positive note, Zireva pointed out that business was extremely encouraged by the ongoing consultations with government, adding it was in everybody’s interest to work together for the good of the country.
“We are in this together,” he said.
Revenue was up 5,4% at US$243 million while profit after tax was US$4,8 million in the period under review.
Zireva said OK had registered acceptable revenue growth. He said this had been achieved against a background characterised by uncertainty relating to the elections, saying whenever there was an election, people tended to become more cautious and spend less.
He added that this was not peculiar to Zimbabwe but also to many other countries.
Zireva said his company had spent US$6,3 million on the two new stores in Wynne Street, Harare and at the Chitungwiza Town Centre. In addition, management said money was spent in the new and bigger Bon Marche at Eastlea as well as on the distribution fleet. Zireva said the company had not spent on refurbishments in the period, adding four stores will be refurbished by the financial year end. The retailer opened two shops and closed one.
“From where we sit we see the liquidity situation worsening. We don’t see that being resolved,” he said in his presentation to analysts and journalists.
OK Zimbabwe is pursuing growing opportunities in the financial services sector and has launched a money transfer and product purchase facility in partnership with a South African company targeting Zimbabweans based in South Africa. The OK Executives said at least 10 000 Zimbabweans in South Africa had signed on for the OK/Kawena venture, but admitted the company had been slow on the marketing front with only 5 000 people signing on in Zimbabwe.
OK Zim is also working with FNB (SA), Standard Bank (SA), Mukuru, Cabs and Ecocash on the financial services side.