Informal traders flood market with second hand clothing
EDGARS Zimbabwe may have to turn to its South African parent company, Edcon, for merchandising assistance as it struggles against increased competition from informal traders who bring in second-hand clothing through the country’s “porous borders” despite import restrictions.
Edgars Zimbabwe managing director Linda Masterson said yesterday that the trade in second-hand clothing had made it difficult for the company to operate.
“We have our loyal customers, but the informal traders are affecting the business,” Masterson said.
The unit said it had noted a “depressed consumer demand for clothing”, which was exacerbated by “stock-movement challenges”.
The company would not declare a dividend for the financial year.
Last year, Edcon dispensed guarantees to the value of $7.2 million (R90.4m) – in interest-bearing loans and borrowings – to its Zimbabwean unit after it incurred a loss of $300 000 for the half-year to July 9.
Product range Masterson said the company would increase its “product range to include school uniforms” and other apparel.
She said that although more emphasis would be placed on local brands, the unit would still look to Edcon for merchandising support.
The unit said after-tax profits in the 12 months to January declined to $500 000 from $3.9m. Revenue fell to $52m from $64m in 2015.
The Jet chain, however, performed well, benefiting from customers buying down to cheaper alternatives.
Debtors amounted to $18.7m for the year to January 8, from $28m in 2015 after an allowance of $1.8m for credit losses and net write-offs of about 7.9 percent.
“Jet-chain debtors were $4.4m ($4.9m in 2015),” Edgars Zimbabwe chairman Thembinkosi Sibanda said.
Jet’s total sales declined to $17.7m from $19.1m in 2015.
The group incurred loan repayments of $6.8m during the period, reducing borrowings to $11.2m, compared with $18m in the previous year.
The company said retrenchments in Zimbabwe affected its ability to generate revenue, while the costs that Edgars itself incurred to retrench staff also weighed heavily on its year-end profits.
The apparel-manufacturing unit run by Edgars Zimbabwe made a trading loss of $400 000, which the company attributed to “reduced demand from group retail” operations.
The company said production at the manufacturing operation was affected by the “limited allocation of foreign currency” to manufacturing and industrial companies in Zimbabwe.