LOSSES of retail household furniture and appliance concern Pelhams Limited widened to $3,3 million for the year ended March 31 2014 due to a sales decline, attributed to liquidity constraints.
In the same period last year, Pelhams posted a loss of $1,7 million.
In a statement accompanying the company’s financial results, Pelhams board chairman Tawanda Nyambirai said the trading environment during the period under review was characterised by unprecedented liquidity challenges which resulted in subdued consumer demand.
Nyambirai said the decline in consumer demand especially for capital goods was caused by the failure of debtors to repay debts at all or on schedule.
The company posted a $3,3 million loss during the period under review compared to $1,7 million same period last year.
“Sales of goods for the year declined by 69% from prior year level of $8,36 million to $2,6 million due to a combination of factors which include the company’s challenges in stocking up its branches and the declining demand for capital goods,” Nyambirai said.
During the period under review, current liabilities exceeded current assets by $4,2 million and the losses were a result of the challenges faced by the company in raising funds for restocking.
Revenue for Pelhams went down to $3,7 million during the period under review from $11,4 million same period last year.
Nyambirai said the closing of branches that were not profitable together with the rationalisation of staff and other expenses contributed towards the reduction of administrative expenses and other operating expenses at $899 191 and $416 339 respectively from the prior year.
“The restructuring of expensive debt and loan arrangements together with the reduction in the company’s loan secured by a mortgage bond contributed towards a reduction in finance costs of $1,02 million from the prior period,” he said.
Going forward, Nyambirai said overheads spanning beyond people and occupancy costs would have to be continuously reviewed in an environment where cash management had become singularly the most important variable in business.
“The company is in the process of finalising stocking preparations with emphasis on high stock turns and key popular lines to drive turnover,” he said.
In 2013, Pelhams embarked on a realignment of overheads and the relocation and closure of non-performing branches and research and manufacturing of exclusive lines to increase margins.
The company’s major shareholders include Lifestyle Holdings (20,6%), TN Asset Management(36%) and Broadway Investments(15%).