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Harare - Zimbabwe’s biggest grocery retailer OK Zimbabwe has reported a 71.6% half-year profit drop on falling prices and weakening demand, it said on Thursday.
OK Zimbabwe, which counts Old Mutual and Investec among its top shareholders, said basic earnings per share fell 70.2% to 0.11 US cents for the six months ended September 30 from 0.37c a year earlier.
In a statement accompanying the results, chairperson David Lake said every business in Zimbabwe has been adversely affected.
“In our sector, the direct effect is that no matter how well stocked our stores nor how competitive our services and pricing, people simply have less to spend on a day to day basis."
The company, which also sells electronic appliances, building and farming products, said revenue for the period declined by 7.9% to $213.6m as the stretched consumer opted for cheaper offerings.
Management said the company was facing fierce competition from rivals such as Food Lovers Market, Pick n Pay and Choppies as well as from the informal sector.
"We continue to face competition from the informal sector which remains alive with vendors selling at our doorstep, from vehicles in car parks, at open markets, and from their homes,” said CEO Willard Zireva at an analysts' briefing held on Thursday.
He added that there is fierce competition in the market through price.
“All major players in both the supermarket and wholesale categories staged heavily incentivised consumer promotions,” said Zireva, adding that this had affected profit margins.
“Gross margins weakened to 16.6% from 18% prior year as product mix slanted towards basic products.”
