OK Zimbabwe’s net sales for the quarter ending June 30 2014 declined by 3,5% attributed to declining consumption and falling product prices.
In a statement by OK Zimbabwe last week, chief executive officer, Willard Zireva said the net sales for the quarter were close to budget, but 3,5% below prior year.
Zireva said, faced with a shrinking economy and declining revenues, management focus was on improving the company’s gross margin while managing costs to sustainable levels.
“During the quarter, the fruits of this thrust were seen with better gross profit in the fully functional own bakeries as well as in other departments through better procurement. Efforts to reduce and contain overheads have also resulted in the level of overhead increases coming down and shrinkage maintained at previous level,” Zireva said.
In the period under review, operating profit grew by 1% against prior year.
Zireva said the outlook for the full year would be influenced by what happens to the general Zimbabwean economy and the retailer remained focused “on efforts to deliver reasonable performance and watchful for opportunities that may come up so we can exploit these”.
He said the trans-border initiative which started last year in partnership with Kawena (Pty) Limited of South Africa has been slow to take off, but the company has allocated resources to it.
OK expects the project to make some contribution to the performance of the company by the end of the year.
He, however, said the financial services operation continues growing and has started to make a meaningful contribution to profit.
Zireva said the capital expenditure programme continues with funding from cash generated from operations.
“The store refurbishment programme is continuing with work at Gweru and Mutare was completed in July. Further refurbishment work is planned for Bon Marche’ Chisipite, OK Mbuya Nehanda and an expanded OK Houghton Park. Partial refurbishments will be carried out at OK Rusape. We are currently assessing possible entry into two centres,” Zireva said
OK Zimbabwe posted a decline in profit after tax of $9,7 million from $12,4 million for the year ended March 31 2014 due to increases in employee benefits during the period under review.
Revenue for the group during the year ended March 31 2014 increased to $484 million compared to $480 million same period in 2012.
Capital expenditure stood at $12,4 million up from $12,1 million in 2012.