Covid-19 fails to slowdown OK Zim
In what could be a sign of confidence, OK Zimbabwe continued in opening new stores and refurbishment of others despite the uncertainties brought by the coronavirus pandemic.
Since March this year it has been business unusual across the country. Due to Covid-19 containment measures, OK Zimbabwe, just like any other business was forced to close some of its outlets, particularly those in central business districts. Operating hours were also reduced for those that remained open.
Business prospects were also dampened by a runway depreciation of the local currency while official inflation peaking at 837,5 percent by July. Consumers could not cope.
As a result, sales volume for the six months to September 2020 declined by 26,9 percent compared to the same period in prior year.
However, despite the downturn in volumes, the grocery retailer still embarked on a refreshing exercise for all its three store brands, namely OK, Bon Marche’ and OKmart.
Capital expenditure for the half year was $384,9 million, up from $51,5 million for the same period in prior year. Most of the capital expenditure was on store refurbishments and equipping new stores.
Post the reporting period, the group opened a new OKmart store in Victoria Falls on October 1, 2020 and an OK Store in Harare’s Sanganayi Inn area on November 5, 2020.
“The group’s refurbishment programme will continue and eight stores have been targeted for completion by the end of the financial year,” reads part of the statement accompanying the results.
Capital commitments amount to $2 billion.
OK Zimbabwe’s capital expenditure and commitments come at time companies across sectors and the globe have announced capital-expenditure cuts ranging from 10 to 80 percent.
Deferring capex is also meant to free up cash, but the Alex Siyavora-led company seem to be comfortable with its position despite a significant drop in cash and cash equivalents to $200 million from $601 million in inflation adjusted terms.
At a time some companies are preserving cash, given the uncertainties, OK Zimbabwe declared an interim dividend of 26 cents per share.
Meanwhile revenue for the half-year grew by 684 percent to $8,7 billion from $1,1 billion in the comparative period. Profit before tax of $1,3 billion was 621 percent up on prior year’s $185 million, while profit after tax increased by 634 percent to $968,3 million from$131,9 million in prior year. Overheads grew by 680,6 percent over prior year.
The group’s response to fight Covid-19 pandemic impacted overheads, particularly RDT and PCR tests, purchase of face masks, thermometers, hand sanitisers and staff passage costs. Contingent rentals, repairs and maintenance, bank charges and cleaning expenses also significantly contributed to increase in overheads.-herald.clz.w
