OK records revenues decline



ONE of the country’s biggest retailers OK Zimbabwe Limited has recorded a decline of 4,3% in revenue to $462,7 million for the year ended March 31 2015 due to persisting deflationary pressures in the country.

Revenue was $483,6 million in 2014. Speaking at the company analyst briefing in Harare last week, OK Zimbabwe chief executive officer Willard Zireva said the economic challenges reported in the last financial year deepened as evidenced by increased company closures and higher unemployment.

Zireva said disposable income declined further and decreases in prices of goods across the various product generics continued with the government statistical office reporting deflation of 1,2% by March 2015 while the company deflation figure was even higher at about 3%.

“The operating environment is pretty tough and actually depressing, but we will not give up. We will continue considering that we are operating in an environment which is challenging,” Zireva said.

In the period under review profit after tax decreased by 22,2% to $7,5 million from $9,7 million in 2014, while overheads increased by 3,8% to $72 million from $69,4 million in the previous year.

“This increase was mainly as a result of increased depreciation expense as new equipment was installed in the refurbishment branches and new stores,” Zireva said.

“The cost of electricity increased markedly as the group rolled out its own bakeries. There was increased use of power generators as electricity outages were more frequent and prolonged.”

He said the cost of borrowings remained low at $0,27 million as the group continued to service its debt. Capital expenditure for the year was $11,3 million down from $12,4 million in the prior year and was mainly in respect of store refurbishment, new stores and replacement of old plant equipment.

Commenting on the company’s outlook, Zireva said the group would continue enhancing brand strength and improve sales growth. He said the group would embark on full scope refurbishment of OK First Street and OK Marondera.

“Partial refurbishment will also be carried out at OK Gwanda and OK Mbare. A new OK Mart will be opened in Mutare soon, while a new OK store is under construction and will be opened in Zvishavane by September 2015,” Zireva said.

“Another OK Mart is planned for Victoria Falls later in the year. A new and larger store will be put up at Houghton Park.”

Speaking at the same event, OK Zimbabwe chief operations officer Albert Katsande said on the supply side very little had changed and the country still depended on imports. However, he said, most of the goods now required permits and licences to import.

Katsande said local supply was still very limited and constrained by a number of challenges which included lack of capital. He said the sector remained competitive and there were new entries on the market with Pick n Pay, Choppies and the informal sector.

“The emerging of the informal sector has taken over the pavements of the central business district,” he said.

Commenting on the company, he said Born Marche store was opened at Borrowdale Brooke which has performed above expectations and a new OK Mart was opened in Kwekwe in March 2015.

Refurbishment work was completed at OK Gweru, OK Mutare, OK Rusape and OK Mbuya Nehanda.


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