HARARE, September 15 (The Source) – Zimbabwe’s clothing retailer, Edgars, on Tuesday reported a 13 percent growth in after-tax profit to $1,2 million from $1 million for the 26 weeks to July 11 boosted by its budget retailer Jet, which has started offering credit facilities.
Revenue grew marginally to $30 million from to $29,4 million in the prior period but sales were lower at $29,3 million from $29,5 million.
Edgars operates two retail chains, Edgars and Jet Stores and the manufacturing arm, Carousel.
Chairman Themba Sibanda said the flagship Edgars chain lost ground to Jet when it started offering credit facilities.
“As expected from the test carried out in 2014, there was some loss of market share to Jet, as some cash-strapped customers favoured the value offerings of the discount chain. Sales decreased by 11,2 percent from 2014 while profitability decreased to eight percent of sales,” he said.
Jet’s contribution to the group turnover increased to 27,1 percent from 18,8 percent with an increase of 43 percent over 2014.
Edgars – a subsidiary of South Africa’s Edcon – is caught up in the pricing competition posed by the informal sector, which sources most of its used apparel from South Africa, China, Botswana and Tanzania.
The liquidity crunch in the country also increased the amount of bad debts, Sibanda added.
“While an increase in bad debt was anticipated, the quality of the book remains excellent with an average gross handovers at 0,5 percent (from 0,4 percent in 2014) of lagged debtors and 2,7 percent of lagged sales,” said Sibanda.
“Bad debt recoveries averaged 2,8 percent of handovers leaving net bad debt at 0,4 percent of lagged credit sales.”
Gross borrowings however grew on the expanded debtors book and were $23,2 million at the half year, as the group anticipated that gearing will be maintained at 1:1 throughout the year.