HARARE, March 16 (The Source) – Clothing retain chain Edgars Stores on Wednesday reported a net profit of $4,6 million in the year to January 9 this year, 12 percent down on the $5,2 million achieved in the previous year as sales dropped by a quarter.
Revenue fell 13 percent to $64 million from $73 million previously after a sharp decline in consumer spending which the group said was more pronounced in the fourth quarter following retrenchments sparked by the High Court ruling on July 17 last year that allowed companies to dismiss workers on three-month notices without compensation.
Labour unions say over 25,000 workers lost their jobs in the months following the ruling.
“Delayed payment of workers resulted in Christmas trading being extremely subdued and sales in that quarter were 23% below prior year,” said chairman Themba Sibanda.
The Edgars chain’s sales fell 24 percent, well below expectations. It’s low cost Jet stores unit saw turnover increase by 23 percent to $19,1 million, contributing 31 percent to the group’s top line.
“Given the macroeconomic environment, the discount chain is the natural choice for cash strapped customers. Due to the poor Christmas trading, both chains ended the year overstocked, which is being addressed and has improved since year end,” said Sibanda in a statement accompanying the results.
Managing director Linda Masterson told an analyst briefing at a local hotel that the company does not expect an improvement in the trading environment in 2016, with turnover likely to remain flat.
The group will close two stores for both Edgars and Jet as part of a wider reorganisation of its operations.
“We expect to have done most of the work by the end of the first half or at the very least, enter 2017 with a leaner business model than we have ever been,” Masterson said.