Profits rolling in for Edgars Zimbabwe despite difficulties

HARARE – Edgars Zimbabwe has strengthened its profits despite economic difficulties afflicting the country as the company tightens its operations.

Sales volumes drove after-tax profits for the interim period to July to $1.9 million (R28m) from the previous period’s $567 499.

South Africa’s Edcon unit, however, did not declare a dividend as it revamped stores. In 2016, Edcon supported Edgars Zimbabwe with guarantees for $7.2m in interest-bearing loans and borrowings after it had a $0.3m interim loss.

“Despite the challenging environment of foreign currency shortages and the threat this has on margins and merchandise assortments, the group’s sales merchandise has grown,” said chairperson Thembinkosi Sibanda.

Revenues increased from $24.6m to $32.1m during the period, while sales quickened from $14m to $18.2m, underpinned by a rise in volumes from the Edgars and Jet Stores divisions, as well as lower credit write-offs.

“Net write-offs (for the Edgars chain) for the period averaged 2.1percent (8.7percent in 2017) of lagged credit sales. Edgars’ active accounts as at June 2018 were 102 874 compared with 110 325,” said Sibanda.

He also stated that Jet, which raised sales from $8.7m to $12m, had lowered write-offs from 6.6percent in the prior year contrasting period to 1.6percent of lagged credit sales. Jet’s active accounts improved from 45 584 to 49 548.

Edgars Zimbabwe had also suffered an impact from “prior year errors” on tax calculations unearthed by the Zimbabwe Revenue Authority. This had impacted retained earnings.

It said the prior year errors related to “the impact of incorrect application of tax legislation in the determination of the income tax expense for the financial periods ending on December 31, 2011 to 2017”.

The retailer now also has higher borrowings at $7.6m compared with $4.6m at the end of the same period in 2017. It said the increase in borrowings was a result of “revamps, shorter supplier credit terms for merchandise inputs” and micro-finance growth.

“Consequently, gearing has increased to 0.24. We expect our borrowings to increase further in the second half in order to finance micro- finance business growth trade payables include foreign liabilities,” the company stated.