By ETimes

Clothing retailer Edgars move in to put inventory management on the forefront after a swift acceleration of e-commerce demand, alongside fracturing supply chains in the wake of the pandemic.

Covid-19 outbreak led many firms to close or reduce operations, with large drop in sales, and significant adjustments in employment, but with large heterogeneity in effects across firms.

As for Edgars, two months of normal trading between January and February were lost due to Covid-19 induced lockdowns. The retailer is not designated as an essential service provider. However, responded through online store sales and WhatsApp trading – although volumes remain relatively low.

Group chief executive officer Tjeludo Ndlovu, in a trading update, said uncertainty caused by the pandemic is likely to continue due to emerging new variants of the virus and vaccine efficacy challenges.

Advertisement

“We are taking steps to exercise rigorous management of inventory levels, closely monitor all aspects of the trade receivables portfolio and optimising our funding mix to meet the needs of the business.

“The business is alive to opportunities presented to expand both our brick and mortar and online footprint and develop a resilient business model that will withstand the impact of future shocks and disruptions,” she said.

As at the end of September 2021 over 70% of its staff members had been fully vaccinated.

Revenue was at ZW$1.29 billion for the third quarter ended 10 October 2021. In the previous quarter it stood at ZW$1.08 billion. This follows the impact of level IV lockdown introduced after the heightened third wave infections in June which curtailed foot traffic into stores.

Advertisement

“This led to lost sales, productive time and pressure to settle fixed operating costs including Covid-19 related expenses for the Group.

“Consumer confidence and spending was significantly depressed, resulting in year to date turnover falling below forecast by the end of September 2021,” she said.

But cumulative units sold were 1.6 million at the end of Q3, which was 15.5% ahead of last year. 
EBITDA for the quarter was ZW$1.29 billion compared to ZW$329 million in Q2.

Gross profit margin declined from 63% to 46% in historical terms compared to the same period last year due to price inelasticity, rising input costs as well as the need for discounting and promotions in order to stimulate sales.

As at the end of September, borrowings were ZW$906 million compared to ZW$725 million at the end of the second quarter, with the average cost of borrowing remaining largely unchanged. “The Group had US$190,000 in foreign liabilities which it is able to service from existing resources,” she said.

Advertisement

Two (Jet) stores were opened, one in Mutoko and the other in Hwange. “The stores are profitable to date.”

Unit sales at Edgars Chain rose 14.7% to 243,311 when compared to Q2. Credit sales constituted 72.5% of total sales compared to 68.1% for Q2. The chain closed September with a stock cover of 12.5 weeks.

Jet Chain’ unit sales of 391,356 were up 15.6% from Q2. Credit sales made up 48.6% of the total sales for the quarter compared to 46.5% at the end of Q2. The chain closed September with a stock cover of 11.15 weeks.

Finance income was up 21.9% in Q3 relative to Q2 on the back of a growing debtors book which increased from ZW$582 million in Q2 to ZW$814 million in Q3. The debtors book performance remained healthy, with 87.5% of the book being current compared to 86.3% in Q2. Active accounts at 37.8% have been stable throughout the year but increased relative to prior year. Collections remained positive at 32.9% of the book compared to 36.7% in Q2.

At Carousel Manufacturing – unit sales increased by 47.4% to 46,484 from 31,537 recorded in Q2.

“Management continues exploring export markets for opportunities offered by the COMESA registration received by the factory.”

The loan book principal value increased by 41.8% to ZW$101million compared to Q2. Interest income was up 34.9% from Q2. 82.1% of the book was current at the end of the period compared to 86.2% at the end of Q2 – Harare

Advertisement

LEAVE A REPLY

Please enter your comment!
Please enter your name here