LISTED apparels retailer Edgars says it is remodeling its business to withstand the headwinds which have brought uncertainty to the domestic economy.
Edgars says notwithstanding the challenges in the operating environment, the group managed to close the 2022 half-year with an improved performance over the prior year.
The group reported revenue of ZW$10.33 billion, a 114% increase from the ZW$4.82 billion achieved in 2021.
Profit before tax of ZW$2.85 billion was 891% up from ZW$287 million attained in the prior year.
“Management continues to remodel the business to capitalise on opportunities that arise in the very uncertain operating environment. Cost containment remains a focus area so as to ensure long-term viability of the business,” reads a statement accompanying the half-year financials.
“The group seeks to expand its geographic footprint through the opening of new stores in strategic locations. Smart merchandise procurement remains a key focus area to ensure that target margins are achieved without compromising the merchandise quality. We will continue to transform our customer experience through revamping our stores to world-class standards, offering widened merchandise ranges at affordable prices and flexible credit terms.
“The recovery to the business is premised on the back of improved access to foreign currency through domestic sales to cover import requirements, a stable exchange rate and slower inflation. Smart merchandise procurement remains a key focus area to ensure that investment in inventory is kept at optimal levels.”
The growth in real terms, Edgars says, is attributed to volume recovery, replacement cost-based pricing, ongoing cost management practice as well as initiatives implemented by management to ensure fresher stock availability in the stores, regardless of the supply chain challenges.
The group achieved a basic earnings per share of 212.07 cents (2021: 33.14 cents). Total group units sold increased by 35% from 0.94 million to 1.27 million compared to the corresponding period last year.
Trading in foreign currency since April 2020 has, according to the group, allowed chains to improve stock assortments which, in turn, has increased traffic in stores.
“Whilst a sizable portion of our cash sales are in foreign currency, we believe that further relaxation of foreign currency trading will go a long way in increasing our USD generation to fund imports,” Edgars says.
“Gearing reduced to 0.14 in the current year from a prior year of 0.21. Funding was channelled towards growing the debtors’ book as well as store expansion initiatives. At the end of the reporting period, the company had USD262k [US$262 000] foreign liabilities which it will be able to service from existing resources.”