HARARE, May 15 (The Source) – Clothing retail chain, Edgars Stores Limited, will issue an additional 9.24 percent shareholding to an employee ownership trust to meet the requirements of Zimbabwe’s local ownership law, the company announced on Monday.
South Africa’s Edcon Limited is the largest shareholder in the Zimbabwe Stock Exchange-listed Edgars, with 38 percent shareholding. Edcon has pared down its interest to the current levels from nearly 60 percent in the early 2000s.
Zimbabwe’s indigenisation law requires foreign-owned firms to transfer majority stakes to locals.
Zimbabwean firms, pension funds and insurers own a combined 45 percent of Edgars, the country’s largest clothing, footwear and textile retailer.
On June 7, Edgars shareholders will consider a special resolution to place the shares with the employee trust at their annual general meeting to be held in Bulawayo.
“The Directors be and are hereby authorized to do all that is necessary to make available to Edgars Stores Limited’s Employee Share Ownership Trust 25 450 000 (Twenty Five Million Four Hundred and Fifty Thousand) ordinary shares equivalent to 9.24% of the total issued share capital of the company which shareholding shall result in the company meeting the 51% Indigenization threshold,” reads part of the proposed resolution in Edgars’ agm notice published on the ZSE website on Monday.
For the 52 weeks to January 2017 (FY16), Edgars reported a sharp decline in net profit to $548,163 almost 90 percent lower than the $3.96 million achieved in the prior year.
The group’s revenue also declined by 19.2 percent, from the $62.27 million recorded in 2015 to $50.3 million prior year due to depressed consumer demand for clothing.
The group’s performance was also weighed down by the stock movement challenges it faced in the transition period from the old system to the new Enterprise Resource Planning (ERP) software solution.
The business process management software allows the group to use a system of integrated applications to manage its operations and systematize many back office functions related to technology, services and human resources.
Edgars management projects a 5 percent rebound in turnover and a 400 percent surge in net profit, on the back of aggressive cost containment.