HARARE - Zimbabwe Stock Exchange-listed clothing retailer Edgars Stores (Edgars) says its profits declined to $4 million in the 52 weeks to January 2016 from $5,1 million last year due to depressed demand in the economy.
The company’s chief executive, Linda Masterson on Wednesday told analysts that Edgars also experienced a 10 percent decline in turnover in the period under review attributed to a 24 percent drop in sales.
“Given the macro economic environment, the discount chain is the natural choice for cash strapped customers. Due to the poor Christmas trading, both chains (Edgars and Jet) ended the year overstocked, which is being addressed and improved since year end,” she said.
The clothing retailer — currently reeling from stiff competition imposed by cheap imports — said massive retrenchments that were precipitated by a High Court labour ruling in July last year affected its bottom-line.
“Delayed payment of workers resulted in Christmas trading being extremely subdued and sales that quarter were 23 percent below prior year,” Masterson said.
She added that despite the declining economic conditions in Zimbabwe, Edgars would remain committed in increasing output.
Zimbabwe is battling a worsening crisis that has forced the economy into deflation in the past 18 months.
This has also been worsened by a liquidity crisis that the country is facing and which has forced the rapid growth of an informal sector that the government is now trying to milk for revenue through the imposition of taxes and levies on vendors and other informal traders.
Edgars has now been caught up in the pricing competition being posed by the informal sector, which sources most of its apparel from South Africa, China, Botswana and Tanzania.
Some of the apparel is made up of pre-used clothing that is shipped as aid from western nations and which is being shipped to Zimbabwe through Mozambique.
“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.
“There will be some business reorganisation costs in achieving this which will impact 2016 profit but ensure that we are well placed for 2017,” she said.
The company did not declare a dividend in the period under review.