Inflation suppresses Edgars’ volumes

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APPAREL retailer Edgars Stores (Edgars) says its sales volumes during the 52 weeks ended January 6, 2019 suffered due to price increases driven by rising inflation.
Monetary and fiscal reforms implemented last year, which included the ring-fencing of Nostro FCAs and RTGS$ accounts as well as the introduction of a two percent tax on electronic fund transfers, have incited inflation to a post dollarisation high of 59,4 percent for February from 5,4 percent in September last year.
Themba Sibanda, Edgars’ chairman said yesterday mark-up action to protect stock-outs was necessitated in October when fears of a return to hyperinflation left customers frantically seeking value.
“Our prices did not go up by as much as some but still had the effect of dampening demand and reducing volumes. Edgars and Jet chain unit sales for the last quarter declined by 37 percent and 33 percent, respectively.
“Being our strongest quarter, including the festive season, this had a negative impact on annual volumes,” he said.

Sibanda said foreign currency shortages necessitated an import substitution programme during the period under review which, “through the efforts of our sourcing teams, was largely successful”.
“Despite these endeavours, local production was somewhat erratic due to the inability of our suppliers to source inputs. Imported product lines which could not be sourced locally such as cosmetics, shoes and lingerie, were more severely affected,” he said.
The listed fashion retailer’s revenue grew by 22 percent on last year to $78,1 million while retail unit sales declined by 11,4 percent for the year.
The company posted a profit after tax of $8,5 million representing a 114 percent increase from the previous comparable period. Sibanda said this was “due to increased margins in the last quarter” which improved to 46 percent form 43 percent.
Sibanda said efforts are underway to reinstate operations in the two Kadoma stores, which premises that were destroyed by fire in November.
Meanwhile, Edgars says it has finalised its acquisition of intellectual property (IP) rights to Jet and Edgars trademarks and brands for the territory of Zimbabwe.
The listed apparel retailer had earlier announced that the deal had been approved by shareholders in an extraordinary general meeting in January.
“The directors are pleased to advise shareholders that the company has successfully achieved all conditions precedent and that the transaction was implemented on Friday 22 March 2019,” the company said in a statement on Monday.
The company had been operating the brands under a franchise agreement, in which it paid annual franchise fees calculated as a percentage of its revenue.
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