Edgars Revenue Declines by 6.81 percent Amid Challenging Economic Climate

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HARARE – Edgars Stores Limited reported a 6.81% decline in revenue for the third quarter ending October 8, 2024, as sales volumes fell by 22.5% compared to the same period last year, The Herald has reported.

The company sold 460,598 units during the quarter under review, down from 594,593 units in the corresponding period last year. Despite the decline, margins improved by 2.81%, attributed to strategic procurement of high-quality, competitively priced merchandise.

“Management has continued its efforts towards ensuring that fresher, high-quality, and more competitively priced merchandise is available in-store,” said group chief executive Mr Saviours Mushosho in a statement accompanying the financial results.

The Edgars Chain recorded a 9.7% drop in revenue, with sales volumes decreasing from 255,561 units in the third quarter of 2023 to 198,952 units in 2024. The mix between credit and cash sales remained stable, accounting for 63% and 37%, respectively, similar to the previous year’s figures.

Jet Chain also saw revenue decline by 14%, with sales volumes dropping 21.9% from 334,897 units last year to 261,634 units in the quarter under review.

On a more positive note, Carousel Manufacturing registered a significant 70% increase in units sold, rising from 122,789 last year to 208,838 units this quarter. The retooling of operations, including the adoption of modern machinery and sourcing high-quality fabrics, contributed to a 7.3% reduction in the average cost of production.

“The sourcing of high-quality fabrics and the use of modern machines is helping to provide our customers with high-quality garments of international standards at very competitive prices produced locally,” said Mr Mushosho.

The group’s financial services segment recorded a decline in its debtors’ book from $10.4 million on June 24 to $10 million by September 24, driven by higher collections than credit sales.

“With liquidity tightening, the business witnessed more customers opting for a longer tenure of 9 months to pay compared to 6 months, allowing for lower monthly instalments,” Mr Mushosho noted, adding that asset quality remained strong, with 77.4% of the book in good standing.

Net debt write-offs to lagged sales were 3.0%, significantly lower than the industry standard of 5%. The company is adopting aggressive measures to grow its debtors’ active account book while maintaining prudent credit management practices.

The group’s microfinance arm, Club Plus Microfinance (MFI), has shifted its focus to deduction-at-source loan products, which are considered less risky. By the end of the third quarter, its loan portfolio had grown to $1.3 million, supported by funding from the group.

“Given the focus made in the first half of the year, the asset quality improved, with the MFI closing the quarter with an asset quality of 86.7%, surpassing the target of 85%,” Mr Mushosho said.

Investments in e-portals have enhanced loan approval and disbursement efficiencies, positioning the business for further growth in the coming year.

Despite the challenging economic environment, Edgars remains optimistic about its prospects. The company plans to leverage its improved operational efficiencies and product quality to expand its market share.

Mr Mushosho concluded by reaffirming the group’s commitment to writing good credit and adapting to evolving market conditions to sustain profitability.

Source: The Herald