Edgars Q1 2024 Trading Update

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June 20, 2024


Directors responsibility for the Integrated Annual Report

The Directors of Edgars Stores Limited are responsible for the preparation and fair presentation of the Group’s consolidated financial statements. The audited financial statements incorporate full disclosure in line with International Financial Reporting Standards (IFRS) Accounting Standards as issued by the International Accounting Standards Board and best practice.

Edgars migrated its listing from the Zimbabwe Stock Exchange (ZSE) to the Victoria Falls Stock Exchange (VFEX) effective 5th of April 2024.

Stakeholders should take note that the inflation adjusted consolidated and separate financial statements for the financial year 2023 will be the last set published in ZWL. The 2024 financial statements going forward will be presented in United States Dollars (USD) which is now the functional currency of the group, and also in line with the Reporting requirements of Victoria Falls Stock Exchange (VFEX).

The principal accounting policies of the Group are consistent with those applied in previous years.

Cautionary – reliance on hyperinflation adjusted financial statements

The Directors would like to advise users to exercise caution on their use of these financial statements due to the material and pervasive impact of the technicalities brought about by the change in functional currency in Zimbabwe at the beginning of 2019 and its consequent impact on the usefulness of the financial statements for subsequent reporting periods. This was further compounded by the adoption of International Accounting Standard (IAS) 29 ‘Financial Reporting in Hyperinflationary Economies’.

Whilst the Directors have exercised reasonable due care in applying judgments deemed appropriate in the preparation of these financial statements, certain distortions may arise due to the various economic factors that may affect the relevance and reliability of the financial information presented in economies such as Zimbabwe, that are experiencing hyperinflation.

Operating environment and overview

Throughout the financial reporting period ended 7 January 2024, the operating environment was characterised by exchange rate volatility and incessant inflationary pressures. Liquidity challenges in both the local and foreign currencies persisted throughout the year coupled with elevated interest rates, although the cost of borrowing in ZWL declined marginally towards the end of the period. Sustained inflationary pressures impacted negatively on disposable incomes resulting in subdued volume sales during the period, compared to prior year.

The period witnessed an increased level of dollarisation in the economy. This, further buttressed by a formal confirmation by the Government that the multi-currency regime will be maintained to December 2030, has improved the ease of restocking the Group’s manufacturing entity and Retail chains. The business responded by rolling out USD credit to assist customers in better planning their financial commitments.

Operating costs in real terms were maintained at a level comparable to the prior year. Occupancy, employment, and fuel costs remained key drivers to the Group’s operating expenses. During the period, management focused on realigning the business model to the realities of trading in a pre-dominantly USD environment, with a specific focus on dealing with pricing volatilities in order to preserve the business’ balance sheet.

Financial performance (based on inflation-adjusted results)

Notwithstanding the challenges in the operating environment, the Group managed to close the period with an improved performance over the year. The Group reported Revenue of ZWL294.0 billion which is 70.3% up from that achieved in 2023 of ZWL172.6 billion. The growth in real terms is attributed to margin improvements due to better procurement, ongoing cost management as well as other initiatives implemented by management to ensure fresher and high-quality stock availability in our stores, regardless of the supply chain challenges. Profit before tax of ZWL40.7 billion was an increase of 342.4% from the prior period of ZWL9.2 billion. Increase in profit for the year was indicative of correct pricing and focused cost management. Finance costs for the period were ZWL20.3 billion, a 2.3% reduction from prior year, reflecting reduction in the lending rates to 100% as well as the switch to USD borrowing which attracted a lower cost. This interest rate benefit was passed onto our customers as reflected in lower price points of merchandise. The Group achieved basic earnings per share of 4 553 cents (2023: 163 cents).

Total Group units sold declined by 10.8% from 2.85 million to 2.55 million compared to the same period last year.

Trading in foreign currency since April 2020 has allowed our retail chains to improve stock assortments, which in turn has increased traffic in our stores. While a sizable portion of our cash sales are in foreign currency, we believe that this proportion can be increased through favourable and consistent application of regulatory policies around trading in foreign currency.

Gearing increased to 137.7% in the current year from a prior year of 103.5%. Funding raised was channeled towards growing the debtors’ book as well as store expansion initiatives.

Retail performance

Total retail merchandise revenue amounted to ZWL244.8 billion representing a 94.8% increase from prior year. The ZWL sales had credit sales of 6.9% (2022: 48.8%) and cash sales of 93.1% (2022: 51.2%). The USD sales had credit sales contribution of 73% (2022: 71%) and cash sales of 27% (2022: 29.0%).

The Edgars chain recorded turnover of ZWL139.3 billion, up 98.5% from prior year of ZWL70.2 billion, and the 1.01m units sold were down 13.03% from 1.16m in the comparative period. The ZWL sales had credit sales of 8.7% (2022: 54.5%) and cash sales of 91.3% (2022: 45.5%) while the USD sales had credit sales of 73% (2022: 71.6%) and cash sales of 27% (2022: 28.4%).

Total sales for the Jet chain were ZWL116.5 billion, up 107.34% from ZWL56.2 billion achieved in the comparative period. The ZWL sales had credit sales of 4.8% (2022: 43.1 %) and cash sales of 95.2% (2022: 56.9 %) while the USD sales had credit sales of 73% (2022: 70.3%) and cash sales of 27% (2022: 29.7%). Total units sold for the period were down 12.99% from 1.56m to 1.36m.

Edgars Stores Limited won the Superbrand 2023 award in the Clothing and Fashion Sector categories in the annual competition run by the Marketers Association of Zimbabwe, whilst Jet Stores won the 1st Runner up position. The Group gave back to the community through various CSR initiatives through its different divisions. This included Cancer Association of Zimbabwe, Breast cancer Awareness campaign, Jairos Jiri shoes donation and Kidzcan clothing donations for children living with cancer.

Financial services

The USD retail debtors’ book closed the period at USD12.6 million, representing a 100 % growth on prior year balance of USD6.3 million, whilst the ZWL retail debtors’ book closed the period at ZWL1.4 billion, a 43.8% decline on the prior year balance of ZWL2.5 billion. The skew reflects the growing dollarisation in the market and the impact of high ZWL interest rates in discouraging credit sales, and borrowings in local currency. Active USD accounts increased to 91K, up from 64K in prior year. The increase came on the back of new accounts opening initiatives as well as account conversion initiatives employed in the last quarter of 2023. The asset quality remained strong at 80.1% for the USD book and at 76.8% for the ZWL book. Expected credit losses (ECLs) as at 7 January 2024 were 3.2% of the book compared to 4.0% as at 8 January 2023, which is within the acceptable industry benchmark of 5.0%.

    Club Plus Microfinance

    The USD loan book closed the year at USD 1,15 million, a growth by 18.1% compared to the prior year’s USD0.98 million. The business focus for the period was to grow the USD loan book focusing on less risky loan products. Asset quality remains positive with 83.6% of the USD book being in current. Improved efficiencies in loan approval and disbursement processes have resulted in improved turnaround time for customers.

    Carousel Manufacturing

    The Manufacturing Division recorded a turnover of ZWL17.7 bn, up 51.03% on prior year (98.6% of revenue was in USD). Total units sold were up 30.9% to 184.8k (2022: 141.2k). The unit during the period was refocussed to become a wholly in-house supplier for the Group’s Retail chains, in the process improving the Group’s control of its supply chain. Revenue was boosted by the improved order book from the chains. Recruitment of skilled machinists led to increased production efficiencies. The manufacturing entity plans to increase its production capacity and output in 2024 on the back of better fabric restocking, and expansion capital expenditure in cutting room solutions and the general retooling of the factory.

    Board membership

    The Board wishes to advise stakeholders of the departure on 31 October 2023, of the following:

    • Ms Tjeludo Ndlovu, the Group Chief Executive Officer of the Group. Ms Ndlovu was with the Group for 11 years, of which the last 3 were at the helm of the Group. She led the Group successfully since her appointment in July 2020 at the peak of the COVID 19 pandemic. It is with profound gratitude that the Board thanks Tjeludo for her service to the Group and wishes her well in her new challenge.
    • Ms Happiness Vundla, who served as the Group Chief Finance Officer for the past two years. On behalf of the shareholders, Board of Directors, management and staff, I wish to convey the Group’s appreciation for the years of dedicated service to the Group.

      New appointments

      The Board would like to announce the following Executive appointments which took place during the course of the year:

      • Mr Sevious Mushosho – Group Chief Executive Officer
        Mr Sevious Mushosho was appointed the Group Chief Executive Officer with effect from 1 November 2023. Sevious is a Fellow Chartered Accountant Zimbabwe with over 20 years of multinational experience in cross-functional management, financial management, audit, insurance, banking, retail and distribution. Mr Mushosho has worked at executive level in various companies in Zimbabwe, Zambia, Malawi and Mauritius, including Sub Sahara Capital Group, Distribution Group Africa, AfriAsia Holdings Limited and Innscor Africa among others. He has been on the Board since July 2022 as a Non-Executive Director and from May 2023 as the Group Chief Operating Officer before assuming the role of CEO.
      • Mr Peter Mnyama – Executive Director – Retail Chains
        Mr Peter Mnyama was appointed as Executive Director- Retail Chains with effect from 1 November 2023. A career fashion retailer with over 25 years’ experience, Peter joined the Group as Merchandise Trainee back in 1998. He rose to Group Merchandise Controller in 2004 and later became Express Merchandise Executive. He moved to Edcon in South Africa in 2008 and later returned to Zimbabwe as the Marketing and Sales Executive for Carousel in 2013, a role he kept until 2016 when he became Merchandise Executive for the Jet Chain. In 2020 he became the Jet Chain Managing Director and then moved to become Edgars Chain Managing Director in 2022. Peter holds a BCom Honours degree in Marketing, an Executive Development Diploma from ICAZ Zimbabwe and a number of Planning and Management Development qualifications.
      • Mr Chesternoel Mutevhe – Group Chief Finance Officer
        Mr Chesternoel Mutevhe was appointed as the Group Chief Finance Officer with effect from 1 January 2024. He has extensive experience in the FMCG sector, having worked for CFI Holdings Limited as Group Finance Director for 7 years. Prior to that he held the positions of Group Company Secretary, Group Treasurer and Group Financial Controller in the same entity. In addition, he headed the property development outfit for the CFI Group. His most recent assignment was as head of finance in Zimbabwe for Karo Platinum. Chesternoel is a qualified realtor and Chartered Accountant, having trained with Deloitte.

        Non-Executive Director Appointment

        The Board would like to announce the appointment of Mr Mark Robb as Non- Executive Director with effect from 1 November 2023.

        Mark is a skilled IT professional with over 22 years multinational experience across Fintech, Banking, FMCG, Media, Manufacturing, and Agricultural sectors. He has a B. Com Honours Degree in Information Systems and Management from Rhodes University in South Africa and many other IT qualifications obtained from various Institutions.

        The Board congratulates all these appointees and look forward to their contributions.


        Management will continue to remodel the business to capitalise on opportunities that arise in the operating environment. In particular, management will focus on retooling Carousel to underpin increased production and improve operational efficiencies in order to better support the Retail chains. In addition, cost containment efforts will be an area of key focus in order to underpin the long-term viability of the business.

        The Group seeks to expand its geographic footprint through the opening of new stores in strategic locations. In fulfilment of our strategic thrust, we opened a new store at Ascot Shopping Centre in Bulawayo in March 2024.

        Smart merchandise procurement and optimal inventory planning remain key focus areas to ensure that targeted margins are achieved without compromising the merchandise quality. Management aims to continue improving customer experiences through updating our stores to world class standards and offering broader merchandise ranges at affordable prices and flexible credit terms.

        The increased dollarisation in the economy is projected to assist the business through improved access to foreign currency through domestic sales to cover import requirements, which we believe will assist with improved stock availability in the shops.

        In view of the subdued agricultural output in current year, the country will increase food imports and will be impacted by food inflation. This headwind will bring disposable incomes under additional strain and reduce USD liquidity in the local financial market. In order to mitigate against the impact of sales volume declines on profitability, the Group will focus on enhancing cost-competitiveness through improving value chain efficiencies. The Group will also re-launch its Express shops, targeting the low-income segment of the economy, where it will sell for cash.


        Regrettably, the Company will not declare a dividend for the 52 weeks to 7 January 2024. The position will be reviewed in future.


        I wish to record my appreciation to Management and staff for their continued efforts in sustaining the business in a difficult operating environment. I also thank my fellow directors for their wise counsel and our customers, suppliers, and stakeholders for their ongoing support.

        T N SIBANDA
        20 MAY 2024