Edgars HY2023 Financial Results

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April 11, 2011

Edgars CEO Linda Masterson says her catchphrase is “quality, standard, credit”

EDGARS Group CEO Linda Masterson (LM) expects the Edgars Group to roll out more shops in and out of Harare before year end. This week Masterson spoke with Business Digest reporter Tendai Zhanje (TZ) about the company’s trading and expansion exercise. Below are the excerpts:

TZ: You have been the Group CEO since 2010, where were you before and what did you bring to Edgars?

LM: I followed a financial career in manufacturing before joining Edgars as Group Financial Director in 1988. After joining the company, I spent the next 20 years alternating between various Edgars directorships, including as Group Manufacturing Director and Group Corporate Services Director before being appointed to the Group CEO position in April 2010.

TZ: Why do you think Zimbabwe has very, few women CEOs?

LM: I think things are slowly changing and that, through role models, people are beginning to see that women can do well in leadership positions. We have to be honest though, the role that the vast majority of women play in the home will inevitably mean that we are in the minority when it comes to the boardroom.

TZ: Edgars has been one of Zimbabwe’s main clothing retailers, offering quality clothes, what three words best describe your secret to success?

LM: Quality, standards and credit.

TZ: How have you managed to make a profit despite the low disposable income on the market?

LM: Credit has ensured that we grow the business despite low disposable incomes. The number of accounts grew from just 38 773 in December 2009 to 111 199 in December 2010. We’ve also had to control our costs tightly.

TZ: What is the direct impact of the increase in cotton and wool prices on Edgars?

LM: So far we have managed to dodge the impact of rising cotton prices but it will inevitably cause a significant rise in the average unit price. With low disposable incomes that will mean a slower growth in unit sales than would otherwise have been the case. Fortunately our factory, which supplies a small but significant part of our product, has a good supply of fabric “old prices”.

TZ: How has your credit “vehicle” helped in pushing volumes?

LM: Credit has always been the driving force of our business. With low disposable incomes, credit helps our customers to be able to afford clothing. Imagine trying to buy clothes for the whole family at Christmas without it?

TZ: Woolworths is refurbishing one of its branches adjacent to the Edgars main branch in Harare’s First Street. What measures have you put in place to ensure that you do not miss your profit margins and you retain your customers once they start operating?

LM: We expect that new competition will make everyone’s share of a very small cake even smaller. But we are gearing up to make ourselves comparable and relevant through revamped stores, with well-trained staff offering quality and fashion, at competitive prices, on credit.

TZ: Rural residents are probably not as liquid as urbanites, are you going to offer them the same services as those in major cities?

LM: You would be surprised! Masvingo, for example, has a very rural clientele and is one of our best-performing Edgars stores. Having said that, we also have the ExpressMart chain which offers quality and value at keen cash prices. We believe the products put together in this chain are an attractive offering.

TZ: How are you planning on increasing your working capital?

LM: Our working capital will keep increasing in line with our growth. The financing of that increased level of working capital is the harder question. So far we have excellent support from some financial institutions and we believe this will continue.

TZ: What contributed to the loss incurred by your manufacturing unit?

LM: Manufacturing in Zimbabwe has been dogged by high utility and wage bills coupled with low productivity. As a result Zimbabwean manufacturing has been unable to compete with imports. We have put in place measures to improve productivity, though not sufficient on their own, these will give us a better basis to work from in 2011.

TZ: What is the VIP card, and how will it increase market share?

LM: The VIP card is an account targeted at high net worth individuals. A customer is invited to join the VIP which gives them instant credit as well as other benefits. The VIP customer is keen on the international brands we are bringing in-store.

TZ: To what do you attribute the achievement of the US$1,5 million profit after tax?

LM: The great work by Team Edgars and the wonderful support from our customers. Staff worked tirelessly to reverse the losses of the first four months and customers showed their approval by shopping with us.

TZ: Down town Harare is flooded with cheap Chinese shops. How is this affecting your market share?

LM: Cheap is not quality and customers will eventually want to return to quality and value for money.

TZ: How do you plan to overtake the Chinese?

LM: I think it is a question of market segmentation and competing rather than “overtaking”. Our competitive edge comes from customer service, quality and value.

TZ: What impact will the coming in of Walmart South Africa have on Edgars Zimbabwe?

LM: Well, it looks like the deal may be derailed by the trade unions, which would be sad for the SA customer. As far as how it would affect Edgars Zimbabwe (if it did happen), it is hard to assess, but we do know that shopping trips to SA are becoming less common and so would expect the impact to be muted.

Source: The Zimbabwe Independent 08-April-2011