Edgars Holdings comes out of the woods

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Edgars Holdings appears to have come out of the woods and could be one of the first companies to weather the economic storm which started two years ago.

The Edgars Group managing director Linda Masterson told a shareholders review meeting in Bulawayo last Friday that the company had recorded a profit of US$11 million in the period between December 2009 and February this year.

The company also managed to recall 38 000 ‘estranged’ account holders within the same period.

“Overtime hyperinflation and price controls totally decimated our working capital in 2008,” Masterston said. “During most of 2009, there were hardly any long term facilities available for us to borrow money. And by the end of December the group owed US$4, 6 million.”

“The group is now concentrated on re-building the business, re-stocking the stores and resuscitating the credit facility. We are currently on a vigorous exercise to increase our credit facility by offering low deposits at zero interest,” she said.

Masterston also said Express Stores, a division of Edgars, would be expanded to Express Marts with larger ranges and lower prices.

According to the group’s financial results, from October 2009 to the changeover date into the new functional currency, the group recorded a loss of US$2,1million

In February 2009, the group closed down 20 stores, eight Edgars stores and 12 Express stores.

This was caused by the group’s failure to buy adequate stocks.

Three of these main stores were in Harare while another main store was in Bulawayo.

“There was a need to close or re-configure some of the locations due to rising occupancy costs, as landlords and service providers were pushing their rates up,” added Masterston.

There are now 34 stores opened – 21 Edgars stores and 13 Express stores.

Masterston said the 34 shops that currently operating were producing enough profits and turnovers and there was no need to rush into opening more.

The credit facility was successfully re-introduced in April last year and had so far performed satisfactorily.

“Collections have been good and arrears performance were more than satisfactory. Altogether, 38 000 accounts have been opened to date.

“At its peak in prior years, the Edgars chain had more that 200 000 active accounts,’ she said.

During 2009, the group’s management efforts were concentrated on re-building the business by downsizing, restocking the stores and resuscitating credit.

“However, the group’s 2010 focus will be on managing the business for profitability through store productivity, healthier margins and higher stock turn,” said Masterson.