CLOTHING retail outlet Edgars Stores Ltd suffered a decline in sales in the last quarter of 2018 due to the currency volatility rocking the market.
By Kudzai Kuwaza
The announcement by the Reserve Bank of Zimbabwe on October 1 last year of the separation of Real-Time Gross Settlement (RTGS) and forex accounts wreaked havoc in the market with the local unit trading at 1:6. This prompted a wave of increases of prices of goods as well as shortages as consumers rushed to buy products in a bid to preserve value.
In its abridged audited results for the year ending 2018, Edgars chairman Themba Sibanda revealed that unit sales for Edgars and Jet for the last quarter declined by 37% and 33% respectively.
“Mark-up actions to protect stock-outs were necessitated in October when fears of a return to hyperinflation left customers frantically seeking value,” Sibanda said. “Our prices did not go up by much as some but still had the effect of dampening demand and volumes.
“Edgars and Jet chain unit sales for the last quarter declined by 37% and 33% respectively. Being our strongest quarter (including the festive season) this had a negative impact on annual volumes.”
Sibanda said the chain recorded turnover of $45,7 million , an increase of 16% on the previous year’stopline of $39,6 million.
He said despite efforts to curb the effects of the acute foreign currency shortage, challenges faced by the chain store’s suppliers were a major obstacle to its operations.
“Foreign currency shortages necessitated an import substitute programme which, through the efforts of our sourcing teams, was largely successful,” Sibanda noted.
“Despite these endeavours, local production was somewhat erratic due to the inability of our suppliers to source inputs. Imported product lines which could not be sourced locally such as cosmetics, shoes and lingerie, were most severely affected.
Despite the difficulties, trading conditions during the 9 months of the year were good.”
The group’s revenue grew by 22% compared to prior year to $78,1 million. The group’s retail unit sales however declined by 11,4% for the year.
“Profit for the period of $8,5 million was 114% higher than the prior year of $3,98 million partly due to increased margins in the last quarter of the year,” Sibanda revealed.
He said the group’s two Kadoma stores, which premises were under lease, were destroyed by fire and efforts are underway to reinstate both operations.