CHAIN store retailer, Edgar’s Stores Limited (Edgars), says it is confident that its turnaround strategy is paying dividends with operating profits surging on a month-on-month basis.
This comes at a time when most clothing retailers have had to move away from selling strictly on a credit basis to a hybrid model of credit/cash as forex disparities persist.
In the company’s third quarter report for the nine months to October 8, 2023, Edgars chief executive officer Sevious Mushosho said gross profit per unit continued to surge with cost per unit declining.
“The group expects the operating environment to remain stable for the remaining part of the year, creating opportunities for the business to grow further. We will continue to look at our business model and review it to adapt to changes taking place in the economy,” he said in a statement released last Friday.
“The group is very confident that its turnaround initiatives are paying dividends as our operating results continue to improve each month with gross profit per unit going up while cost per unit is declining.”
Mushosho said the business was alive to opportunities to expand both its brick and mortar and online footprint to develop a resilient business model that is expected to withstand the impact of future shocks and disruptions.
“The group did exceptionally well during the third quarter achieving unit sales of 649 788 which was 28,5% up from the same period last year which had 505 531,” he said.
“However, cumulatively for the nine months to October 8, the unit sales were 2,4% below last year (2023: 1 744 654 vs 2022: 1 781 073) due to the currency instability experienced in quarter 2 which saw customers losing a significant part of their buying power especially the civil servants who are 35% of our business.”
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In terms of a unit breakdown, the firm’s Edgars chain realised unit sales of 260 043 during the third quarter representing a growth of 39,7% on the prior year.
However, cumulatively for the nine months to October 8, chain unit sales were 2,16% down on prior year (2023: 703 253 vs 2022: 718 768).
“Credit sales constituted 63% of total sales compared to 54% in the same period last year. The chain closed September with a stock cover of 10 weeks (2022: 17,3 weeks),” Mushosho said.
Jet chain recorded unit sales of 334 910 for the third quarter which were 18% up on the prior year units of 283 877.
Cumulatively, for the nine months to October 8, the chain unit sales were 4,10% down to 918 616 compared to the 2022 comparative.
“Credit sales made up 60% of the total sales for the quarter compared to 49% in the same period last year. Stock cover closed at 10,6 weeks (2022: 12,46 weeks),” Mushosho said.
Borrowings closed the business at US$$5,4 million at the end of the third quarter, up from US$$4,9 million realised during the second quarter and ZWL$3 billion compared to ZWL$3,4 billion as at end of the second quarter.
The average cost of borrowing for ZWL$ was at 107,99% per annum compared to 89,35% per annum in June 2023 while the US$ average cost of borrowing was 13,39%.
“The group had US$125 456 in foreign liabilities which it can service from existing resources,” Mushosho said.
