Household and appliance retailer Pelhams Limited posted a more than 1 000% growth in after-tax profit to $1,5 million during the full year ended March 31 2012 buoyed by a growing appetite for credit.
After-tax profit for the group stood at $121 831 for the previous year.
During the period under review, unit sales more than doubled and were driven by credit sales, which grew by 127%.
The company’s debtors book recorded a 197% growth to $2,3 million during the period under review as Zimbabweans, currently hit by low disposable income continued to rely on credit amid high default rates.
This strategy, according to chairperson Oliver Chidawu, underpinned the sales growth of 95%.
Tradewinds, the company’s manufacturing unit, maintained its revenue contribution of 5% of the $16,7 million revenue recorded during the period.
“The continued increase in local production costs had a negative impact on the margin which reduced to 27% against a prior year comparative of 30%,” Chidawu said.
“In the absence of suitable funding, the sales mix for the year was mainly skewed towards locally manufactured products, which earn a lower margin relative to imports.
“To augment the securitisation structures that have sustained operations to date, the company will require long-term funding structure, which has been pending since 2009.”
Chidawu added: “In a market with low disposable income and tight liquidity, credit continues to be the area of focus in the short term for the business.
“The high cost of producing locally and inconsistency of supply continues to favour imports so as to improve supply and margins, and the company will continue to pursue this strategy.”