RETAILER, OK Zimbabwe (OK) has experienced a drop in US dollar revenue as most consumers opted for more favourably priced goods in local currency compared to the greenback in its first quarter ended June 30, 2024.
According to the food security initiative, Famine Early Warning Systems Network, generally, US dollar prices of basic food and other commodities and services have been stable but remain high and unaffordable for most poor households
On the other hand ZiG priced groceries are generally more stable due to the controlled official exchange rate, which carries a 30% premium over the parallel comparative, enabling consumers to buy more using local currency.
Amid growing capex needs and suppliers mostly demanding US dollars as a more stable currency, the drop in OK forex earnings could negatively impact the firm.
“Revenue increased by 2,2% for the first quarter ended June 2024 compared to the same period in prior year.
“US$ collections, however, dropped significantly from FY2024 last quarter and FY2025 first quarter as most consumers were now using ZWG,” OK said in its first quarter trading report ended June 30, 2024.
“The introduction of the new Zimbabwe Gold currency (ZWG) brought with it a measure of stability.
“This resulted in year-on-year inflation declining from 57,48% in April 2024 to 3,76% by 30 June 2024.
- OK forex revenues takes a tumble
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“However, the shortage of foreign currency in the formal banking sector continued to put pressure on the exchange rate and some stakeholders began to insist on USD payments for products and services.”
However, OK said that fiscal and monetary measures being implemented by the government were highly commendable.
“The group remains committed to delivering value to its shareholders by focusing on executing fair pricing, expanding market presence and optimising operational efficiencies, while prioritising customer satisfaction for long term sustainability,” OK added.
During the period under review, despite a significant increase in volumes, sales values increased marginally as a result of the growth in contribution of bulk product sales that carry a lower unit price.
This resulted in an increase in basket size of 28% against a customer count decline of 6,8%.
“Volumes increased by 20,2% for the quarter ended 30 June 2024 compared to the same period in prior year,” OK said.
“The growth was mainly driven by improvement in the performance of the OK Grand Challenge promotion, which marked the inaugural participation of the group’s OKmart stores.
“The success of this promotion was further bolstered by the ongoing support from our key partner suppliers, who played a crucial role in its execution.
“Additionally, the stability of pricing during this period contributed positively to volume recovery, as customers responded favourably to the Group’s commitment to fair pricing practices.”
OK said the group continued to position itself to seize opportunities from the increased consumer spending, if the economy continued a growth trajectory.
“Whilst the liquidity challenges impacted trading during the period, the RBZ increased ZWG notes and coins in circulation easing change shortages and has taken further steps post the quarter to curtail liquidity constraints,” OK said.
In its financial report for the year ended March 31, 2024, released in June, OK noted that the group continued to implement its volume recovery strategies and was looking forward to volume growth in the current financial year.
The retailer revealed that the business intended to sustain volume growth trajectory through consistent availability of products, continuance of the fair price campaigns and other key volume recovery initiatives.
