Axia Corporation in solid performance

Specialty retail group, Axia Corporation Limited, experienced a solid performance for the third quarter to March 31, 2023 supported by a 12 percent growth in TV Sales and Home.

The business environment during the period under review was, however, challenging due to inflationary pressures and exchange rate volatility.

“The tail end of the quarter, however, witnessed increased levels of exchange rate volatility, and the gap between the formal exchange rate and the alternative market rate widened and this had a negative impact on our trading in the formal market.

“The reduction in ZWL interest rates had a positive impact on the operations and enabled the Group to access working capital funding in local currency,” said the group in a trading update for the period.

Its flagship business, TV Sales and Home recorded volumes increased by 12 percent against the comparative period.

Consumer spending has remained high as indicated by a 19 percent growth in the USD debtor’s book from December position and the business has been making efforts to introduce new product lines that meet the ever-changing customer needs.

According to the group, the business was also able to leverage on the reduced local currency lending rates.

In line with the business’ plans to grow the retail footprint, the new Madokero branch opened its doors in February 2023 and the business is currently working on strategic projects to open two additional stores in Harare and a bedding store in Gweru before the end of the financial year.

However, Restapedic’s turnover and volumes were below expectation for the quarter. The downturn was a result of disruption caused by the move from Msasa premises to the new factory in Sunway, which affected March sales and production figures.

It is, however, envisaged that the last quarter of the financial year will show significant recovery as first phase of the new factory is already complete with management now operating from the premises.

Exports commenced in April 2023 with an initial order of three truck loads being sent to Zambia and one to Malawi.

According to the group, volumes at Legend Lounge were disappointing with production interrupted as management was working to fix product design with a view to aligning this with the market requirements.

Product redesign is 80 percent complete and is helping the factory with efficiencies and improving the quality of the product to the customer.

But Touch Distributors continues to see turnovers and volumes growth. As a new business was established towards the end of the last financial year, there are no comparatives. As the market now has some experience with the offerings, an aggressive procurement plan has been put in place and the prospects for the future are very exciting. A new retail store is set to open in Harare at Central Sorting Office, selling selected lines direct to the public.

Transerv’s revenues for the quarter was 11 percent above the prior year whilst volumes were marginally down. The company opened two new shops, one along Simon Mazorodze Road (Zindoga) and another along Harare Street (second shop along Harare Street).

The total number of shops opened in the nine months is four including Mbare and Highglen retail shops that were opened in the second quarter. Two new shops, one along Samora Machel and one along Bulawayo Road are at an advanced stage of renovations and scheduled to start trading in May 2023.

In addition, the company also opened a wholesale division at its head office along Simon Mazorodze.

As for DGA Zimbabwe, year to date volumes were 26 percent below the comparative period though Q3 volumes were only 7 percent down to comparative period. Decline in volumes is a result of a decision to stop supplying some customers to manage the risk on the extent of debtors’ balances especially in an inflationary environment.

For DGA regional operations, Zambia’s Kwacha depreciated sharply off the back of low foreign currency supply. Revenue increased by 16 percent whilst volumes increased by 10 percent compared to the prior year. Malawi continues to face shortages of foreign currency and this resulted in the business reducing its orders and selling of imported stock which led to a decline in sales volumes by 21 percent.

While the Zimbabwean operating environment remain challenging with many distortions, management remains hopeful that progressive policies regarding money supply, exchange rate and interest rates will be reinforced to foster stability in the market and gradual building of confidence.

“The group is focused on exploring the expansion opportunities available in the market,” said Axia.-ebusinessweekly