Pandemic takes toll on Edgars

Listed clothing retailer, Edgars Stores Limited, says year to date turnover for the trading period to January 10, 2021, feel 17 percent in inflation adjusted terms on depressed volumes.

Units sold for the year to date declined to 2,4 million from 3,4 million last year.

Demand for the quarter declined to 995 000 units from 1 224 000 units last year.

However, quarter on quarter, demand went up 70 from 585 000 units recorded in the third quarter.

Chief executive officer Tjeludo Ndlovu, attributed the growth to improved liquidity on the market during the festive season.

“The company recorded revenue growth across all business units during the quarter, particularly in December. The availability of merchandise, improved civil servants salaries, year-end bonuses and an enhanced credit offering to customers contributed positively to this growth,” she said in a trading update for the fourth quarter to January 10, 2021.

“Notwithstanding this growth, the trading environment remained challenging due to the ever increasing cost of doing business, liquidity constraints, high cost of borrowings, Covid-19 challenges as well as generally low disposable incomes.

“Towards the end of the fourth quarter, government reintroduced a level four lockdown suspending all store trading,” she said.

Earnings before interest, tax, depreciation and amortisation went down 6 percent compared to the same period last year.

Borrowings at end of December trading period were $245 million. The Group did not have any material foreign denominated debt at the end of the quarter.

At Edgars chain, year to date unit sales of 888 000 were down 36,5 percent compared to the same period in 2019.

Credit sales increased to 64 percent from 40 percent of total sales in the third quarter.

Unit sales at Jet chain fell 29 percent to 1,3 million from same period in 2019.

Cash and credit sales contribution to total sales were 55 percent and 45 percent respectively. Carousel Manufacturing recorded 32 percent growth in unit sales for the period to date.

Total sales for the last quarter were lower than the previous quarter as the factory operated for only a week in December.

During the quarter under review, the clothing retailer reviewed customer credit limits upwards leading to an increase in the gross debtors book to $428 million at the end of December trading period from $123 million at the end of September.

Interest income grew 32 percent year-on-year in inflation adjusted terms in line with the growing debtors book. Edgars reduced interest rates were in December resultantly increasing active accounts to 41 percent of total number of accounts from 32,9 percent during the third quarter.

At Club Plus, the micro finance loan book increased 6 percent in inflation adjusted terms to $30,5 million as at end of December trading period.

Interest income grew 62 percent from Q3 on the basis of the bigger book written and firm interest rates.

Management, however, sees depressed performance for the first quarter of 2021 due to disruptions caused by Covid-19 pandemic.

Said Ndlovu: “The ongoing lockdown has denied business two months of normal trading, which has severely constrained prospects for Q1 of F2021.

“The business has responded through online store sales and WhatsApp trading — although volumes remain relatively low.”

Management will also focus on cost containment and managing cash flows in order to offset the increased cost of doing business due to among others fuel price hikes.-ebusinessweekly.co.zw