Clothing retailer Edgars Stores Limited says the material disruptions stemming from Covid-19 lockdown restrictions had a significant impact on the its performance, most significantly in April to May 2020 and in the last week of the 2020 trading period.
The pandemic caused multiple shocks to businesses in Zimbabwe, with most firms experiencing a drop in demand and disruptions to supply chains of input, raw material and merchandize for resale.
Units sold declined from 3.4million in 2019 to 2.4million in 2020.
“The business consequently lost 1 million units in sales compared to the 2019 year. This demonstrates the significant impact on business continuity that lockdowns may have in the future,” said Themba Sibanda, group chairman.
Full year revenue was down 23% to ZWL2.1 billion and profitability down 320% to a loss of ZWL176.5 million in inflation adjusted terms.
The decline in performance was attributed to lost sales during the lockdowns as retail of clothing was not classified as an essential service.
Edgars closed the 2019 financial year with a lot of aged stock which when indexed had the unfortunate effect of distorting the value of cost of sales by significantly reducing the gross profit margin.
Trading in foreign currency since April 2020, he said, has allowed retail chains to improve stock assortments, which in turn has improved the number of feet in our stores.
It introduced an in-store remittance agency, where diaspora remittance beneficiaries collect their money from selected branches.
“The selected stores have recorded improved foreign currency sales.” he said.
Gearing increased to 0.20 in the current year from 0.19 in 2019. The business did not have any significant foreign liabilities as at 10 January 2021.
The Edgars chain recorded turnover of ZWL1.1 billion from ZWL1.75 billion in 2019 out of 26 stores.
Units sold for the year were 887 700 from 1.39million in 2019. Total sales for the Jet chain were ZWL896 million from ZWL981 million in 2019 out of 27 stores. Units sold for the year were 1.28million from 1.80million previously.
The factory recorded turnover of ZWL285 million from ZWL204 million. “The sale of face masks and other personal protective equipment contributed significantly to this performance,” he said.
The gross retail debtors’ book closed the period at ZWL431 million compared to ZWL423 million in 2019.
“The credit environment remained challenged by high inflation, making value preservation very difficult.” As expected credit losses increased during lockdown period to 2.2% from 1.1% of the debtors’ book at 10 January 2021. The microfinance loan book, like the retail book, faced similar challenges in value preservation. The loan book closed at ZWL30.3 million from ZWL28.9 million previously.
It continues to remodel its business to capitalise on opportunities that arise in the very uncertain operating environment. “Available foreign currency will be used to improve on merchandise ranges and assortments to grow turnover whilst at the same time escalating efforts to manage operational costs.”
The company is retooling the manufacturing unit to enhance its capacity to supply our retail chains and cater for external customers and export sales.
“We will be opening two new stores in the first half of 2021 and are looking for compelling locations to grow our footprint,” he said.
He added that the online stores are fully operational for both Edgars and Jet, whilst Club Plus microfinance online loans uptake is growing underpinned by robust promotional activities to boost awareness.
It did not declare a dividend – Harare