Edgars Stores’ gross margins improve

EDGARS Stores Limited says gross margins for the 26-week trading period to 11 July 2021, improved to 46 percent from 42 percent in the same period last year driven by fresh inventory assortments and increased imports.

The company’s inventory for the period grew to $1,05 billion compared to $663 million in the prior year with merchandise amounting to $869 million while raw materials, work in progress and consumables amounting to $187 million.

Themba Sibanda, the group’s chairman, said in a statement of the financials the company has planned future capital expenditure of $322 million that will be financed through existing cash resources and utilisation of authorised borrowings.

However, in the period under review, the group spent $25,5 million on opening new stores and store revamps compared to $17,9 million spent in the comparable period.

The bulk of the capital expenditure at $25,05 million was spent on furniture, fittings and leasehold improvements while $464,522 was spent on computer equipment.

“Capital expenditure during the half-year was channeled towards new stores, namely Jet – (Kwame Krumah – Harare, Mutoko, Hwange) and Edgars Avondale,” Mr Sibanda said.

He added that the retailer is looking forward to the opening of Edgars Avondale and Jet Hwange stores in October.

In terms of sales, the apparel retailer’s unit sales were two percent below last year with 945 000 sold at the end of the second quarter of the year compared to 963 000 units in 2020.

Mr Sibanda said that the trading environment for the first six months was significantly impacted by the Covid-19 lockdowns in January, February and the last two weeks of June.

“The company is not designated as an essential service provider and as a result lost close to seven trading weeks due to store closures and reduced trading hours,” he said.

He added that limited social, educational and economic activity during the period also meant that demand for clothing over this period was lower than normal.

“As at the end of June turnover was significantly behind target. Notwithstanding the challenging environment, positive business sentiment, stable interest and exchange rates, and a lag in inflation ensured that our financial services business units continued to perform and remain profitable over the period, ably sustaining operations,” Mr
Sibanda said.

He said that the impact of lockdowns on trading was such that it necessitated the increase in borrowings in order for the business to service ongoing commitments such as occupancy and utility costs, as well as ensuring that employees were remunerated on time.

“The increased borrowings were at an average interest rate of 44,4 percent per annum compared to 43 percent per annum in 2020.”
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The group at the end of June had US$190000 in foreign liabilities which it is able to service from existing resources.
Edgars Chain unit sales of 344 249 were down six percent from 2020’s 366 720). Credit sales constituted 68,1 percent of total sales compared to 64,7 percent for the quarter. “Stocks closed at 13,7 weeks cover compared to 17,2 weeks cover in 2020 Jet Chain – unit sales of 526,691 were up one percent compared to 523 034 in 2020.

Credit sales made up 46,5 percent of the total sales up from 40,9 percent at the end of Quarter 1 and stocks closed at 15,7 weeks cover.

The group’s finance income was up 249 percent year-on-year and 6,6 percent up in the second quarter relative to quarter 1.

“This was despite the fact that interest rates were reviewed downwards over the period.”
The unit’s debtors’ book increased from $519 million in June 2020 to $639 million in June 2021”.

Mr Sibanda said the book performance remains healthy, with 86,3 percent of the book being current, compared to 84,9 percent in Quarter 1.

“Active accounts at 37,4 percent, while stable throughout the year, declined relative to prior year and collections were good at 36,7 percent of the book, compared to 39,8 percent in quarter 1.”

Carousel Manufacturing Unit sales declined to 74,021 from 121,093 units in 2020 resulting in lower efficiencies relative to last year.

Mr Sibanda said the factory secured its first export sales to the region in this quarter and management continues exploring export markets for more opportunities. Club Plus – Micro Finance saw its loan book increasing by 150,4 percent to $76 million compared to $30,5 million last year.- The Herald