Edgars Stores Limited, Zimbabwe’s leading apparel dealer, says it is now competitively positioned to recapture lost business after it secured more favourable lines of credit to fund its operations, making it possible to sustain credit initiatives.
The company, which manufactures, distributes and sells clothing, footwear, textiles and accessories through a network of stores, saw a turnaround in May and expects to report a profit this year.
Together with other label-based clothing chain stores, Edgars faces a severe undercutting from a rapidly growing boutique-based second-hand apparel market, which emerged in the last five years.
In its abridged financial report for the 25 weeks ended July 3, Edgars said it secured low-cost line of credits with tenure long enough to sustain operations, but admitted its capital gearing was still too high.
“While the company has managed to source adequate lines of credit to fund its operations, financing of working capital remains difficult but we did bring down our average cost of borrowing from 38% at year end to 18% currently, with slight longer terms being secured. While gearing levels remain high, this ratio will progressively improve over the one year ahead.”
In the first half of the year, unit sales also surged 607%, buoyed by a systematic growth in the credit book.
New accounts nearly doubled, surging to
62 000 from 38 000 in December last year.
In a trading update, the clothing chain store said it added a further 12 000 accounts in July and August.
The rate of account settlement averaged 37,4% per month, peaking at about 50% in May.
Consequently, Edgars closed the trading period with current balances dominating the debtors’ book. For the 25 weeks, the group reduced its trading loss to $249 577 from $1,7 million in the 26 weeks to July 4 last year.
Sales amounted to $10,3 million from $1,5 million, led by retail sales, which accounted for $10,1 million of the gross turnover.
The company’s subsidiaries include Carousel (Pvt) Ltd, Express (Pvt) Ltd, Associated Merchandising Corporation (1974) (Pvt) Ltd, Edgars Employee Share Trust Company (Pvt) Ltd and Zimedgroup Employee Trust.
Edgars as a chain targets the middle -to- upper -income group, while the Express chain targets the low-income group.
The brand operates from 37 stores and of these, three are Express Credit stores and four are Express Mart stores.