PELHAMS Limited recorded a loss of $1,1 million for the half year to September as compared to $508 865 in 2012 due to a decline in revenue.
By Business Reporter
During the period under review, revenue declined by 60% to $1,7 million from $4,2 million in 2012.
“This was mainly attributable to reduced stock levels across branches as well as reduced sales from the traditionally dependable civil servants’ disposable income,” Pelhams Limited chairperson Tawanda Nyambirai said in a statement accompanying the group’s unaudited abridged financial results.
Despite the decline in revenue, selling and distribution expenses declined to $41 697 for the half year ended September 30 2013 from $82 523 in 2012.
Administration expenses also declined to $1,3 million from $1,9 million in 2012, while other operating expenses increased to $681 000 from $508 865
Nyambirai said credit sales for the six months under review contributed 67% of the total sales compared to a prior year of 60%.
Gross margins decreased to 19% from 23% in 2012.
“This was mainly a result of dominance of lower margin local products during the period under review. The company did not import any products that usually attract higher margins,” Nyambirai said.
He said margins were further reduced by a deliberate strategy to incentivise cash sales to improve the cash position.
Nyambirai said the gross debtors book reduced to $4 million from an opening balance of $7,3 million and the decrease in the debtors book was mainly a reflection of the depressed sales.
During the period under review, the company’s manufacturing unit, Tradewinds, contributed 6% to a total sales.
Tradewinds manufactures middle income lounge suites for Pelhams and Office Furniture.
He said the company focus for the second half of the year would be securing working capital facilities in order to improve stock levels and revenue.
“The company will also introduce measures to increase cash sales compared to credit sales. This means re-introductions of small whites such as microwaves, kettles etc in the product range. This will reduce pressure on the funding gap,” he said.