Multi-currency extension to boost confidence: Edgars
RETAIL clothing giant, Edgars Stores Limited says the Government’s decision to continue with the multi-currency regime until 2030 will go a long way in instilling confidence in the overall economy.
In October 2023, President Mnangagwa extended the tenure of the multi-currency regime beyond the initially proposed 2025 cut-off period as previously gazetted in 2019.
This came as the 2025 cut-off period created uncertainty among businesses in the country, following reports banks started cutting down on US dollar loans.
Approximately 80 percent of local transactions are conducted in US dollars while most bank loans are also now in forex.
“The economic environment was relatively stable during the quarter after the Central Bank and Government interventions which aimed at stabilising the Zimbabwe dollar exchange rate and inflation.
“The interventions among others included the announcement that multi-currency regime will continue until 2030, which brought confidence in the financial markets,” said Edgars group chief executive officer Mr Sevious Mushosho in the trading update for the nine months to October 8, 2023.
According to Edgars, liquidity constraints continued to be a challenge in the period under review as most banks struggled to fulfil drawdown requests.
However, the situation improved soon after the national plebiscite in August 2023, and the clothing firm expects the stability to continue until the end of 2023 fourth quarter.
Operationally, the group performed outstandingly in the third quarter as unit sales surged 28,5 percent to 649 788 from 505 531 realised in the same period last year.
Cumulatively, unit sales for the nine months to October 8 closed at 1 744 654, 2,4 percent lower than the prior year’s 1 781 073, after the country experienced currency instability during the second quarter, which impacted disposable incomes.
The currency instability saw customers losing a significant part of their buying power especially the civil servants who constitute 35 percent of the business.
Edgars Chain unit sales registered a 39,7 percent growth in the third quarter, to 260 043 while revenue for the nine months surged 43,99 percent in historical terms ahead of last year.
Credit sales constituted 63 percent of total sales compared to 54 percent realised in the same period last year. The group’s other segment, Jet Chain, managed an 18 percent growth in unit sales to 334 910 from the prior year’s 283 877 units, while credit sales made up 60 percent of the total sales for the quarter compared to 49 percent in the same period last year.
The segment’s revenue closed the nine months 48 percent ahead of the prior year in historical terms.
Carousel (The manufacturing business) attained a 54, 6 percent growth in sales units to 54,835 year on year during the quarter under review.
Mr Mushosho indicated that Carousel had plans to acquire more machines including a laser cutter to improve efficiencies, increase production capacity, and reduce the cost of production.
Given the looming demand from the chain stores, the factory had enough stocks of raw materials to meet the increased demand.
According to the group’s CEO orders for more fabric were placed to cover 12 months of production for all the product ranges.
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