Jet in depressed performance

HARARE - Edgars Stores Limited (Edgars)’ South African-themed Jet stores performed below expectation as the unit’s profit slumped 40 percent to $522 527 in the 52 weeks to January 4, 2014 from $869 224 recorded in prior comparable period.

The Zimbabwe Stock Exchange-listed clothing retailer partly attributed the depressed performance to start up costs associated with the opening of new Jet branches.

“The chain traded out of 23 outlets at year end, having opened another four stores,” said Edgars’ managing director, Linda Masterson.

She said the group’s immediate focus was to contain Jet’s costs and improve its product assortment and price. Edgars — 36 percent owned by Edgars South Africa (SA) — began trading under the Jet banner in November 2011.

The move was part of the group’s expansion drive and plans to harness the mass market.

Jet is one of the largest clothing retailers in southern Africa, targeting the lower end of the market, with more than 321 outlets across SA, Botswana, Lesotho, Namibia, Swaziland and Zimbabwe.

Overall, against a background of a shrinking economy, Edgars failed to meet its target as sales were negatively affected, particularly in

December, which were lower than expected.

“This resulted in us not achieving the budget as anticipated,’ said Masterson.

During the period under review, the clothing retailer recorded a $4,2 million profit after tax,12 percent above prior comparable period’s $3,8 million.

Merchandise sales went up to $64 million from $60 million while cost of sales increased to $33,7 million from $31,7 million.

The group’s Edgars Stores sales grew five percent to $51,4 million from $48,8 million.

“This represents 80 percent of group retail sales of which 72 percent were credit sales. At year end the chain traded of 26 outlets with a gross trading area of 26 572 square metres,” said Masterson.

Credit accounts increased nine percent to 197 932 while average handovers were 0,3 percent and 1,4 percent of lagged debtors and credit sales respectively.

Provision for doubtful debts was 2,2 percent of total debtors which stood at $23,5 million at year end.

Capital expenditure amounted to $1,8 million, which was spent on new stores and refurbishments.

“The major capital expenditure project in the coming year is an upgrade of our IT systems, which form the backbone of our business, to a fully integrated system which will enable us to better serve and interact with our customers, suppliers, bankers and other stakeholders,” she said.

In the group’s outlook, Masterson says they anticipate to increase turnover to $70 million with trading profit at eight percent of turnover while profit after tax will be 44,7 million.

“Focus will be on cost control, more fashion and less price and a wider choice for customers,” she said.

The company, did not declare any dividend citing a backlog in capital expenditure projects embarked on and the level of debt which was still too high.

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