Meikles to inject $4m into retail division

LISTED Meikles Limited (Meikles) plans to inject $4 million into its retail division following repayment of its debt by the Reserve Bank of Zimbabwe recently.

The group said the fresh capital injection will see its retail division — comprising Meikles Stores, Barbours and Meikles Mega Market — grow its market share and return to profitability in the second half of the year.

“The division is to focus on providing affordable products to the mass market while providing high-end fashion clothing and accessories through Barbours,” said the company.

The Zimbabwe Stock Exchange-listed group’s retail division was handicapped by a severe shortage of working capital following losses incurred due to price controls imposed prior to introduction of the multiple currency system in 2009.

The stores, like many companies in the country, were forced by regulation to sell inventories at prices below cost. In the succeeding years, the group has operated without any benefit from its deposits held at the central bank.

Meikles said the retail division has been unable to invest in inventories or unit improvements as it should in a dynamic environment and losses have been made as a result.

However, earlier this year the central bank announced that it was finally paying up to $90,8 million debt it owed to Meikles — a development which is likely to have a material impact on the group’s performance in the second half of the year.

“Sales in Barbours are up on the previous year while sales in Meikles Mega Markets have been growing very rapidly. The division is in the process of rationalising costs through the centralisation of its head office structure and combining all activities under a single structure and command with key focus on the provision of the required skills,” said Meikles.

The group noted that Meikles Stores will operate in all their traditional properties in Zimbabwe, but in space that will be smaller and more focused than in the recent past.

“The remaining space in each unit will be occupied by Meikles Mega

Market and in certain units by TM Supermarkets. Meikles Mega Market is a rapidly growing participant in the Zimbabwe retail environment and we shall add more units in the high density suburbs of Zimbabwe.

“We are pleased to announce the launch of a new activity, beauty and hair salons. We view this as a rapidly growing market and have the capacity to establish businesses in spaces that are not being fully utilised by TM Supermarkets and Meikles Mega Market, the object being to secure beneficial occupation within all our various properties,” said Meikles.

The group is expecting the beauty and hair salons to make an immediate impact and contribute positively to its profits and cash flows while making efficient use of the company’ space.

“We have given this top priority and expect the first salon to be opened in October and others to be launched before the end of the year. It is expected that these developments will ensure that by the end of the calendar year, the Meikles’ Retail Division, together with its sister company TM Supermarkets, will be the largest retailer in terms of sales in Zimbabwe.

“The retail division will be profitable, it will have strong positive cash flows and a strong management team with passion and focus,” added Meikles.

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