Edgars now prefers US dollar accounts
Clothing retailer, Edgars Stores Limited, has reportedly stopped opening new ZWL credit accounts, preferring USD credit accounts and cash purchases.
According to a snap survey on selected Edgars branches, existing ZWL account holders are continuing using their accounts. However, they have options to convert their ZWL account balance to USD which is said to have low interest charges.
While the Government has been promoting usage of local currency and boosting confidence of its use within the economy, some businesses are demanding only US dollars.
In June this year, Government gazetted Statutory Instrument 118A of 2022 entrenching the multi-currency system into law and this measure is running for the duration of the National Development Strategy 1 (2021-2025) (NDS1).
However, Edgars Limited Group financial services executive, Alexander Timburwa, said the retailer has only introduced a USD account option in addition to the existing ZWL accounts.
“As Edgars Stores Limited, we have not stopped the ZWL credit facility. We expanded our credit offering to include a USD account option. Conversion from a ZWL Account to a USD Account is optional to all customers.
“Furthermore anyone wishing to open a ZWL account and qualifies for such can also do so,” he said in emailed responses.
In its recent trading update, Edgars US dollar sales were up 15 percent in the second quarter while credit sales constituted 45,6 percent of total sales compared to 60,2 percent for Quarter Two, 2022.
Overall unit sales at Edgars of 186,179 were down 23 percent on the prior year same period and also down 37 percent on Quarter Two largely on account of reduced aggregate demand following a sharp increase in minimum lending rates (MLR) announced in early July.
Edgars said the depreciation of the local currency and the high interest rates dampened consumption and investment levels resulting in customers cutting on ZWL purchases negatively affecting sales growth, as a result, the company introduced USD credit in response to this decline in ZWL demand.
At Jet Chain — unit sales of 283,877 were down 27 percent on prior year, and dollar sales up 16 percent on the second quarter.
Credit sales made up 37,6 percent of the total sales for the quarter compared to 52,75 percent at the end of June.
Meanwhile, the company said it expects the operating environment to remain challenging and complex in the face of difficult choices on economic policy, rising global inflation and high local inflation.
“As we focus on business continuity, we are taking steps to exercise rigorous management of inventory levels, closely monitor all aspects of the trade receivables portfolio and optimising our funding mix to meet the needs of the business,” said Tjeludo Ndlovu, the group chief executive, commenting on the financials.
She said the business is alive to opportunities presented to expand both our brick and mortar and online footprint and develop a resilient business model that will withstand the impact of future shocks and disruptions.-ebusinessweekly
