OK Zimbabwe made inflation-adjusted revenue of $10,27 billion from $8,59 billion the prior year amid concern by the retail giant that shortage of fuel, electricity, foreign currency and runaway inflation continue to choke business.
In its annual results for the period ended March 31, OK Zimbabwe said its sales volumes, however, declined by 15,7% year-on-year indicating a decrease in consumer buying power.
OK Zimbabwe said despite the effects of the drought and shortage of foreign currency, its stores were adequately stocked for a significant part of the year thanks to the support of its suppliers.
The raging inflation, which galloped to 785,5% as of May, has eroded both private and public sector buying power.
Overheads grew by 427% — 37 percentage points below growth in revenue stemming from generator fuel costs for alternative power, electricity costs, maintenance costs and spares, bank charges and rentals as the major overheads growth drivers.
Profit for the year was $586,6 million from $426,3 million the previous year.
Total assets for the year grew to $2,93 billion from $2,53 billion
Significant increases were noted in expense lines directly linked to revenue. Internally-generated funds were adequate for working capital and capital expenditure requirements, hence no borrowings were utilised in the year.
OK Zimbabwe said the poor agricultural output combined with fuel and electricity power deficits worsened the overall economic performance during the year.
“The operating environment continued to be unstable during the year under review characterised by shortages of foreign currency, local currency depreciation, hyperinflationary conditions and a decline in real incomes,” said the retail giant.
“Foreign currency shortages worsened as the year progressed, leading to a slowdown in the importation of both essential capital goods and merchandise either directly or through supplier partners.”
The company said the shortage of foreign currency led to a runaway exchange rate which triggered rapid price increases of goods, and the resultant inflation eroded consumers’ real disposable incomes and demand.
At the end of the retailer’s reporting period in March 2020, annual inflation was at 676,39% compared to 66,80% for the same period last year.
Capital expenditure for the year was $236.4 million, up from $25.8 million in the prior year, as the group continued with its refurbishment programme.
“The refurbishment programme continued during the year, with makeovers being completed at OK Gweru, OK Mutare, OK Triangle and Bon Marche’ Westgate. Sales performance of these branches is pleasing. A new OK store was opened in Karoi towards the end of the year on the eve of the Covid-19 pandemic lockdown,” OK Zimbabwe said.