Depressed consumer demand hits Lifestyle Holdings

DELISTED diversified group Lifestyle Holdings has recorded a slump in business over the last six months as Zimbabwe’s economy continues to underperform.

Bernard Mpofu

Group chief executive officer Tawanda Nyambirai told NewsDay that his business had been affected by depressed consumer demand triggered by liquidity constraints which confronted the economy before and after the July 31 general elections.

Nyambirai said despite adopting a cocktail of measures to contain rising operational costs, some of the company’s units remained in the red. This, he said, has also resulted in delays by the company in paying staff salaries.

Among some the measures that the company employed to cut bloated operating costs are a salary cut between April and June this year.
The company also closed down some of its factory and retail outlets in Harare.

“The hardships facing the economy have negatively affected the financial performance of TN Harlequin Luxaire (Private) Limited (“TN Harlequin”). Furniture products being capital products have seen significant reduction in demand as disposable incomes came under pressure from the liquidity crunch that the country is facing,” Nyambirai said.

“Increasingly most households’ disposable incomes are now just enough to meet basic needs such as rent, food, transport and school fees.

The lack of funding to finance long-term credit sales has worsened the situation for TN Harlequin.

“Resultantly, sales have declined significantly from 2011 levels. In the absence of sustainable funding, the business cannot extend long term credit to customers to try to stimulate demand. Consequently, TN Harlequin has been making losses since the beginning of the year with gross profit way below the levels required to cover operating costs.”
After showing signs of improvement in the first three years of dollarisation, the Zimbabwean economic environment began to worsen.

Investment into the country has not reached the levels necessary to sustain economic growth. This deterioration in the economy has seen capacity utilisation in the manufacturing sector coming down from 44,9% last year to 39,6% in 2013.

“Management engaged its landlords to negotiate its rentals downwards and also made a decision to close some of the branches that were not performing as per management’s expectations, hence, the reduction in the rentals costs bill. Management has reached a ceiling on what it can do to reduce its rental costs and will have to close down the high cost branches,” Nyambirai said.


“The above (cost-cutting) strategies have had limited success in addressing the bloated operating costs of the company. Resultantly, the company has fallen behind in salary payments.

While some subsidiaries are up to date on salaries, the furniture manufacturing division has not yet paid October salaries, while the Retail Division has only paid part of the September salaries.”

According to the National Social Security Authority (NSSA) Harare Regional Employer Closures and Registrations Report for the period July 2011 to July 2013 shows 711 companies in Harare closed down, rendering 8 336 individuals jobless as the economy continues to underperform.

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10 Comments

  1. i dog eat dog chaiyo.

  2. Ma1 ega ega…

  3. I think it is the way they handled their hire purchase products. It was chimbabdzo and people resisted. Why are other shops e.g TV sales and Hire doing its because they read the market and knew that consumers maybe be able to ay so much to buy furniture. I understand Truworths has become innovative to have people dressed up and pay in 36 months somehow you have to be innovative. I once inguired on a sofa I was told it cost 1200 cash or 5000 on 12 months hire purchse after paying a hefty deposit seriously I will not peep into that shop. Be innovative Tawanda. Kunzwana has specials of zero deposit to customers and fine you may have bad debts but not all will be. What is the point of staying 12 months with a TV set wanting cash when you could be getting a certain amount every month.

    1. i support you my man and want to add that, the TN franchise was mismanaged by every manager there including the CEO. you could see there was also the issue of bad corporate governance as the TN guys were now synonymous with parties and an entourage of chicks.

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  5. furniture business haridi dzungu, vakafunga kuti unoda kubudusa munhu wese mu business iwe wosara wega wozotanga monopoly that can’t work tsano. We have been into this furniture business since time immemorial and we know the game holistically. How could you come in the sector and start lobbing of suppliers to increase prizes for raw materials and disenfranchise every player of the raw materials, that’s poor business ethics.

  6. can you also report on his TN Medical fund they are not paying claims by medical doctors I think this is the beginning of the end for this self proclaimed business man who was riding high with Masiwa’s funds he just has too many business adventures which are not sustainable in the long run

  7. That’s the problem when an individual riding on the back of some rich and successful businessman ‘ s finances decides to call himself a businessman. Not all people are business minded. I implore Nyambirai to not only blame the macroeconomic unstable environment currently obtaining in Zim but to also do a honest introspection. Your idea of diversification is good but it does triumph when done within a short time frame without proper research.

  8. Uyu muchinda wekuita bank remombe uyu ari confused.What exactly is the business model of this company?

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