Edcon writes off $2.2m in Zim as Jet jumps to rescue

Harare - Edgars, Edcon's unit in Zimbabwe which also runs Jet stores in the country, said credit sales are improving on the back of declining defaults, despite having to write off US$2.2m for its full year to end-December.
 
South African retailers - both grocery and clothing - have looked to expand and revamp their operations in their rest of Africa markets as prospects back home weaken. In Zimbabwe, Edgars has introduced Jet stores which are helping it claw back losses from the Edgars chain.
 
"Despite the deterioration in disposable incomes, customers have been paying, albeit not as timely (sic) as in the past. Total gross write-offs for the year amounted to $2.2m, which equates to 4.1% of lagged credit sales and 0.6% of lagged debtors (2014:1.9% and 0.4% respectively)," Edgars said on Wednesday.
 
Although the Edgars chain recorded a decline in turnover, the Jet chain’s turnover rose by 23% to $19.1m and contributed 31% to consolidated group turnover, compared to 22% a year earlier.
 
Edgars Zimbabwe has actually “performed relatively well given the sharp decline in the operating environment and economy as a whole,” according to Themba Sibanda, chairperson of the chain store.
 
Despite stronger performance from the Jet chain, “the group was not entirely spared, and saw a marked reduction in consumer confidence reflecting in turnover”.

This worsened in the last quarter of 2015, which experts say is the peak period for clothing retailers as it feeds into the high spending festive season.
 
Edgars Zimbabwe said the “delayed payment of workers (in November and December) resulted in Christmas trading being extremely subdued” and sales in the last quarter of the period falling by 23%.
 
This drove down the group’s comprehensive income by 12%, while profits for the period declined to about $4m. The overall decline in profit prompted the company to forgo a dividend for the year under review.
 
Most business executives are not expecting Zimbabwe’s economy to improve this year as the country battles a severe drought, declining economic activity, company closures and subdued commodity prices.
 
Zimbabwe has also persistently remained in deflation, while retailers are being forced to lower their profit margins in response to declining disposable incomes and salary payments.
 
“We do not forecast an improvement in the short term, but are gearing the organisation for a leaner, and more productive future, by remaining committed to reducing costs and increasing productivity,” Sibanda said.