Edgars record $0,5m profit

HARARE - Listed clothes retailer, Edgars Stores Limited (Edgars), said its profits in the half year to July 9, 2017 went up to  $567 499 compared to $109 119 recorded in the previous corresponding period due to improved sales.

The company’s chairperson Thembinkosi Sibanda yesterday said good merchandise assortments and a resurgent consumer spend assisted the group to end the first half on a positive note.

“Revenue of $24,7 million increased by seven percent from $23,1 million in the same period last year.

Group gross profit margin of 43 percent reduced by one percent from the same period last year,” he said.

The group’s profit before tax for the six months jumped to $0,9 million from a loss of $0,3 million in the 2016 period.

Sibanda noted that Edgars’ Enterprise Resource Planning (ERP) solution has enhanced controls over credit policies.

“This, together with improved debt collection and policy changes in credit management has resulted in savings of $1,5 million on last year.

“We anticipate savings of at least half this amount in the second half of the year. Other operating expenditure increased due to post go-live ERP continuing support,” he said, adding that other significant cost increases include factory costs and electronic payment commissions.

The clothing retailer’s net borrowings reduced by $1,8 million from December 2016, closing the six months at $9,4 million.

Of this, $8,7 million were current and $0,7 million were long-term.

Sibanda said the group expect this level of borrowings to be maintained to year end.

“We will continue to improve store environments. We have recently completed the refurbishment of Edgars Stanley House in the Harare CBD and the conversion of Edgars Rusape to a Jet store is in progress,” he said.

Our microfinance business, he added, Club Plus (Private) Limited has commenced trading albeit with caution.

The business will focus on short-term consumer loans.

“While 50 percent of our product is sourced locally, the prevailing foreign currency shortages will impact our product ranges, particularly for the fourth quarter.

We will pursue all options to obtain key imported products for our customers and inputs for the factory while actively implementing import substitution where feasible,” Sibanda said.

The Edgars boss further indicated that cost containment and preservation of profitability continues to be of great importance to the group.

“The biggest obstacle to import substitution is limited allocation of foreign currency to local suppliers for fabric and trim imports. This should be of national concern.

“Given the gravity and intensity of the unfolding cash shortages and foreign currency scarcity, management is working tirelessly to avoid an inadequately stocked fourth quarter.

Provided we succeed, management is confident that the business will meet the 2017 profit forecast,” he said.

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