|Retail giant, OK Zimbabwe says its volume growth for the quarter ending this month will be backed by the resumption of the Grand Challenge promotion.|
The promotion was stopped twice, first in 2009 due to the economic crisis that engulfed the nation and last year on Covid-19 pandemic.
In the year ended 31 March 2021, the group’s volumes declined by 13% on Covid-19 induced lockdown and reduced consumer disposable income. But the improvement in volume performance relative to the decline of 27% reported for the half year is on the back of easing of the restrictions during the second half of the financial year.
“The resumption of the Grand Challenge promotion in the current financial year is expected to underpin volume growth in the first quarter,” said group chairman Herbert Nkala.
Foreign currency availability and exchange rate stability, he said, improved during the year mainly due to the success of the foreign currency auction system introduced in June 2020.
“This together with the liberalisation on the use of foreign currency for domestic sales under Statutory Instrument 185 of 2020 brought some stability into pricing and product supply. The foreign currency component of the Group’s sales remained low, although this was largely adequate for the Group’s inventory and capital expenditure import requirements.”
Capital expenditure for the year was ZWL1.2 billion down from ZWL1.5 billion in prior year. Most of the capital expenditure was on store refurbishments and equipping the new stores.
He said the refurbished stores and new branches were well received in their respective markets and made a significant contribution to the group’s sales.
Nkala said the group will continue to pursue more innovative initiatives to grow market share profitably.
“The refurbishment and expansion drive will be reinforced, with a number of stores targeted for refurbishment and potential new sites under consideration,” he said.
Inflation adjusted revenue for the year declined by 2% to ZWL34.3 billion from ZWL35.0 billion in the prior year. Profit before tax of ZWL2 billion was 42% below prior year’s of ZWL3.4 billion, while profit after tax declined by 46% to ZWL 1.1 billion from ZWL 2.0 billion in prior year.
Overheads increased 6% over prior year. “The measures implemented by the Group to curtail the spread of Covid-19 increased the cost base. Electricity charges, staff costs, cleaning costs and security expenses also contributed to overheads growth.”
The economy is expected to benefit from the anticipated good harvest from the 2020/2021 agricultural season, availability of foreign currency on the auction system and declining inflation.
“The Group has been investing in capacity enhancement and is therefore well poised to maximize on the anticipated economic rebound.”
It declared a final dividend of 54ZWL cents per share and brings the total dividend declared for the year to 80 ZWL cents per share – Harare