EDGARS Stores Limited has figuratively become the sole listed clothing retailer following Truworths’ entry into corporate rescue in 2024, a move prompted by severe financial distress and insolvency.
Edgars migrated from the Zimbabwe Stock Exchange (ZSE) to the Victoria Falls Stock Exchange (VFEX) on April 8, 2024, after delisting from the ZSE on April 5, 2024, in a strategic bid to raise capital in US dollars.
Since then, the company’s market capitalisation has fallen by 30%, dropping from US$12 million on May 2, 2024 to US$8 million as of June 16, 2025.
Like other formal retailers, Edgars has been impacted by mounting pressure from the informal sector, which continues to draw customers away by offering more affordable alternatives.
The decision to migrate to the VFEX followed a difficult financial year ending January 7, 2024, marked by an 11% decline in unit sales to 2,55 million, while the cost of sales remained high.
The group posted a trading loss for FY24, largely due to rising operating expenses including wages, fuel, utilities, and power backup costs amid narrow gross profit margins.
For the six months ending July 7, 2024, Edgars continued to face pressure from subdued consumer spending, resulting in a 22,4% decline in unit sales from 1,09 million to 0,85 million.
As a result, revenue fell by 15,4% to US$16,1 million, compared to US$19 million in the previous half-year. During this period, Edgars invested US$1 million financed through a combination of internal funds and borrowings into expanding its Carousel manufacturing division.
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In its recently released full-year results for the period ending February 28, 2025, the company reported a 22% drop in sales volumes and mounting competition from informal clothing retailers, who now command over 60% of market share.
The group recorded total revenue of US$36,9 million for the year, reflecting a 9,1% decline compared to the previous year. With that in mind, let us examine the key contributors to Edgars Stores’ top line.
According to the latest financial statements, the Edgars chain accounted for 47% of total revenue, while the Jet chain contributed 36%.
Carousel, factory sales, and Express Stores made a minimal contribution of just 0,5%, with the remaining revenue coming from other sources such as microfinance operations and debtor accounts. The Edgars chain primarily targets the upper-income segment, whereas Jet caters to the mid-income demographic.
To tap into the broader mass market, where the majority of Zimbabweans fall, Edgars launched six Express Stores in the final quarter of the year ending January 5, 2025. These stores offer products priced between US$1 and US$10, aiming to meet the needs of price-sensitive consumers.
Edgars expanded its footprint by opening a new Edgars store in Ascot, Bulawayo, and a Jet store in Hogerty Hill, Borrowdale.
In my view, this reflects the group’s growing awareness that its business model cannot rely solely on the aggressive rollout of Express Stores while neglecting the strategic importance of its core SBUs, Edgars and Jet stores.
Ideally, revenue is driven by either price or volume. For Edgars and Jet, pricing has been the key factor sustaining revenue despite falling unit sales.
In contrast, Express Stores depend on high-volume sales due to their low-price model. If executed correctly, this segment could become the group’s most sustainable revenue stream, as transactions are entirely cash-based and appeal to the broader population, mirroring the informal sector’s model.
Edgars plans to open 10 more Express Stores in the current financial year, a move I see as strategically sound.
The sustainability of the Edgars and Jet stores remains questionable. Over 70% of sales in these chains are on credit, a risky model in Zimbabwe’s current economic environment.
The group’s debtors book closed at US$11,6 million, down 7,4% from the previous year. While improved receivables turnover may improve liquidity in the short term, overreliance on credit sales is unsustainable in my view.
This mirrors the fate of Truworths, which had 85% of its sales on credit, leading to chronic liquidity issues, salary arrears stretching over 16 months, and eventually, corporate rescue.
Escalating operating costs (employment and occupancy), hyperinflation, currency volatility, and rising informal sector competition compounded its downfall. The result was a total restructuring that erased shareholder value, with creditors expected to recover just 12 cents on the dollar.
Edgars’ partnership with David Whitehead Textiles for local fabric supply, along with its investment in the Carousel factory, which led to a 58% increase in production volumes, improved cost control, and enhanced margin efficiency, is a silver lining.
To remain competitive against low-cost clothing imports from countries like China, the group should continue prioritising automation of its labour-intensive operations at the Carousel plant.
Additionally, the rollout of solar systems across 32 stores last year, with plans to extend this to the remaining stores in the current year, is another commendable step.
In Zimbabwe’s challenging operating environment, effective cost containment strategies like these are not just smart, they are imperative for businesses to remain viable.
- Taimo is an investment analyst with a talent for writing about equities and addressing topical issues in local capital markets. He holds a First Class Degree in Finance and Banking from the University of Zimbabwe. He is an active member of the Investment Professionals of Zimbabwe community, pursuing the Chartered Financial Analyst charter designation.
