Michael Tome and Panashe Chikonyora
Edgars Stores Limited says it continued to experience a decline in products uptake in the half-year period to July owing to subdued consumer spending.
Lately, consumers, have been struggling to keep pace with the wave of frequent price escalations as the majority of formally employed population have not been awarded salary increases commensurate to the obtaining cost of living. Some quarters now even estimate that food basket alone for a six member family now stands at around $4 000 a month leaving little or no funds for extra spending.
Edgars outlined an array of issues that propelled the downtrend in their business in the period under review including the introduction of monocurrency midyear 2019 resulting in a 17 percent decline in performance in the company’s collective units.
In a statement accompanying half year results, Edgars chairman Thembinkosi Sibanda, noted that their business recorded a negative unit growth resultant of restrained consumer spending. Going forward the company signalled a pessimistic stance given the obtaining economic environment.
“Consumer spending was suppressed, and continues to slow down due to depressed salaries purchasing power. Business recorded negative unit growth, with only April and May performing positively in unit terms. In June, positive performance was again negatively affected by the introduction of monocurrency. The prevailing liquidity challenges impact negatively on our stocking and growth initiatives while decimated consumer salaries continue to suppress demand,” Mr Sibanda said.
Despite the aforementioned challenges Edgars recorded a solid financial performance posting a 594 percent jump in profit to $13 million for the half year ending 7 July 2019 from $1,9million in the prior comparable period last year.
In the period under review the company’s revenue modestly rose to $63 million from $32, 1 million last year, translating to a 95.7 percent in the positive.
The company’s store expenses and other operating expense shot up to $8,1 million and $9,6 ,million respectively in the six months from $5,872,100 and $5,708,862 – recording a 38.7 and 67.7 percent increment.
Profit before tax stood at $19, 4 million from $2, 6 million making a 640 percent solid move upwards.
Basic earnings per share had a 553 percent increase, growing to $4.83 from $0.74 last year.
These developments come as Edgars subsidiary, Jet Stores, continues to expand its footprint across Zimbabwe after it opened a new branch in Banket a fortnight ago and reopening of Kadoma branch after it was gutted by an inferno early this year.