LISTED clothing retailer Edgars Stores has not been spared from the impact of diminishing consumer purchasing power, with its year-to-date turnover to April 2020 increasing by 465% on last year while units sold were down 18%.
BY MTHANDAZO NYONI
In the trading update for the 13 weeks ended April 5, 2020, Edgars chief executive Linda Masterson said both chain stores — Edgars, Jet and manufacturing unit Carousel — recorded loss in sales volumes.
“The group has not been spared from the impact of diminishing consumer purchasing power with year-to-date turnover to April 2020 increasing by 465% on last year while units sold were down 18%. Earnings before interest, taxes, depreciation, and amortisation at $50,6 million, was 850% up from last year,” Masterson said.
She cautioned that the trading update was not based on Financial Reporting in Hyperinflationary Economies-IAS 29 as required, but on historical cost.
They will, however, continue reporting in compliance with IAS 29, she said.
In the period under review, Edgars chain’s unit sales went down 21% on prior year, Jet chain reported a 10% drop, while Carousel recorded a 73% decline.
In terms of dollar sales, both chain stores recorded an increase, with Edgars recording 457%, Jet 559% and Carousel 136%.
Gross debtors increased by 354% from last year to $114 million while interest income for the period was $29,5 million.
Total borrowings increased to $149 million, while trade and other liabilities were up 600% on last year.
Masterson said the business benefited from the 2019 year-end overstock, as a result, no additional stock needed to be bought for January and February 2020.
As such, retail inventory at $131 million, grew 555% from last year.
Going forward, Masterson said the lockdown, which started on March 30, 2020 and the extension thereafter, resulted in loss of sales for Edgars and Jet chains as well as their manufacturing unit, Carousel.
Collections from debtors also declined.
She said operating expenses were expected to increase due to the need to procure sanitising and cleaning materials, protective clothing and thermometers for use in curbing the spread of the virus in their environment, as per government directive.
“The cost of continued mandatory screening tests may not be sustainable in the foreseeable future,” Masterson noted.
She said the operating environment in Zimbabwe continues to be volatile, uncertain and disposable incomes were lagging behind inflation.
“However, re-introduction of multi-currency payment modes is most welcome and has had a positive impact on the business,” Masterson said, adding that management would continue monitoring the operating environment and map the right strategies to navigate the landscape.