Harare - Job losses and delayed pay dates in Zimbabwe are worsening trading conditions for credit-based clothing and apparel retailers, with the Zimbabwean unit of Truworths [JSE:TRU] saying on Wednesday that consumer incomes have come under threat.
Truworths Zimbabwe, in which the SA-based Truworths has a 34% stake, on Wednesday said interim profits to the end of the first week of January showed a massive improvement to US$328 000 from $49 000 in the previous comparative year.
Other credit clothing retailers in Zimbabwe include Jet and Edgars, both of which are owned by SA companies.
"The trading and credit environment is expected to deteriorate during the remainder of the 2016 financial period.
“Consumer incomes will come under increased stress levels in an environment characterised by job losses, delayed pay dates and reduced earnings," said Truworths Zimbabwe CEO Bekithemba Ndebele.
The company will now focus on "the management of trade receivables so as to maximise cash-flows" and "ensure improvement and enhancement of the quality of the book".
In the half-year to the first week of January, group merchandise sales were 2.5% higher at $11 029 394. Sales had also surged 6.6% on a comparable basis.
Truworths Zimbabwe said the doubtful debt allowance as a percentage of gross trade receivables had increased to 6.3% against 5.1% in the year earlier period. It further stated that at the end of the period under review, about 78.8% of the group’s account holders “were able to make purchases”.
It has long-term borrowings of $5m which comprise debentures of $2m as well as a bank loan of $3m.
“The debentures are unsecured and bear interest at 12.5%. The bank loan bears interest of 11.5% and is secured by cross company guarantees,” Truworths Zimbabwe said in a note to its financials released on Wednesday.
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