OK Zimbabwe blames tuckshop economy as volumes decline by 7, 7%

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LEADING retailer, OK Zimbabwe has once again leveled the blame on several factors in the external environment following an annual decline of sales volumes by 7,7% in the just-ended annual year.

The top retailer was recently described as a ‘crybaby’ by Finance and Investment Promotion Ministry’s secretary, George Guvamatanga after raising bitter complaints to the effect that the informal sector continued to outmaneuver formal retailers.

In response, an annoyed Guvamatanga said the retailer is fully staffed with incompetent management’ failing to keep pace with the transforming economic dynamism.

But presenting the group’s performance report for 2023, OK Zimbabwe chairman Herbert Nkala said volumes had declined on the back of a series of challenges in the operating environment.

“Volumes for the year declined by 7,7% over the comparative period owing to local currency liquidity shortages and depressed consumer spending power. The informal sector continued to expand at the expense of the formal retail sector as a result of exchange rate distortions in the market,” he said.

The group said Profit after Tax (PAT) decreased by 36 % to ZW$5.2 billion (Last year: ZWL8.1 billion).

The profit performance was impacted by the increase in operating costs arising from increased usage of generator fuel due to acute power outages, inflation pressures embedded in forward pricing by market players, as well as exchange rate-induced cost increments on labour, cleaning and security costs.

The Group has taken measures to reduce and contain costs to improve its profitability going forward.

Capital expenditure for the year was ZW$6,1 billion down from ZW$8,9 billion in the prior year. Most of the capital expenditure was channeled towards store refurbishments. In addition, there was an acquisition of a subsidiary amounting to ZW$3,7 billion.

“The operating environment remains constrained. Overheads continue to rise driven by wage inflation and the growth of utilities and service industry expenses.

“The Board and Management remain vigilant in protecting the Group from the relentless shocks arising from the volatile economic environment,” added Nkala.

Despite the outcry, a section of market watchers has blamed the errant conduct of exorbitant forward pricing in the ZWL by formal retail shops as chief among the causes prompting the consumers to explore cheaper alternatives in the informal sector. – NewZim