Listed clothing retailer, Edgars Stores Limited forecast to maintain growth trajectory into the fourth quarter of its financial year on the stability of the macro-economic conditions.
Following implementation of the Covid-19 induced lockdown, businesses such as clothing retailers suffered from lost trading hours as they were not deemed essential service providers which saw them close shop for the whole of April.
But the gradual easing of lockdown restrictions during the third quarter of the year together with stability on the foreign currency exchange rate has seen activity improve across sectors.
The clothing retailer is anticipating to carry that growth trajectory into the fourth quarter of the year, which is traditionally the best performing quarter due to high sales recorded during the festive season.
“We expect the recovery observed in this quarter (Q3) to continue into Q4 if the macroeconomic stability persists. Historically, the last quarter significantly outperforms the first three and accordingly we look forward to a strong performance.
“Key to achieving this will be good diaspora remittances and reduced new Covid-19 cases which will allow free movement of people. We are launching online stores for the retail chains in time for the festive season trading period, complementing the pilot WhatsApp selling platform that is currently being offered in select stores,” said Edgars chief executive officer Ms Tjeludo Ndlovu in a trading update for the 39 weeks to October 04, 2020.
While Covid-19 negatively affected sales across sectors, Carousel Manufacturing — a unit of the group — cashed in on opportunities created by the pandemic which saw unit sales increase, thanks to face masks production.
A trading update for the 39 weeks to October 4, 2020, shows that unit sales were up 142,7 percent for the period to date driven by Covid-19 masks in general and by the Chains (Edgars and Jet) summer stocking programmes.
Overall group performance shows year to date turnover for the period was down 36 percent in inflation adjusted terms and up 445 percent historically.
Units sold for the year to date declined to 1,5 million from 2,5 million last year due to Covid-19 induced closures experienced in the month of April. Demand for the quarter also declined from 820 000 units last year to 585 000 units.
The Edgars chain recorded unit sales went down 50 percent to 453 752 against the same period in 2019.
Credits sales improved from 25 percent in the last quarter to 40 percent of total sales.
“The macroeconomic operating environment improved this quarter as characterised by exchange rate stability and slowing inflation. As a result the company cautiously extended more credit to customers thereby increasing the number of feet in our stores,” said Ms Ndlovu.
Overall, credit sales remained well short of the historical contribution to total sales of 70 percent to 75 percent.
At Jet chain, unit sales of 771 893 were down 43 percent for the period to date against 2019. Ms Ndlovu said cash sales contributed 88 percent and credit sales 12 percent of total sales for Q3 compared to 91 percent and 9 percent respectively in Q2.