Edgars USD credit sales soar
LISTED consumer discretionary manufacturer and retailer, Edgars Limited, has seen its foreign currency credit sales increase in the year ending to January 09, 2023 as more customers prefer to trade in the more stable US dollar.
Edgars group chairman, Thembinkosi Sibanda, in a statement accompanying financials, acknowledged that the company saw its USD sales split into credit sales of 71,6 percent and cash sales of 28,4 percent.
“Total retail merchandise revenue amounted to $26,2 billion representing a 36,8 percent increase from prior year. The split between credit and cash sales for the local currency was 48,8 percent down from 61,2 percent in 2022 and 51,2 percent from 38,8 percent in the prior year while the USD sales had credit sales contribution of 71 percent and cash sales of 29.0 percent,” Sibanda said.
The group seeks to expand its geographic footprint through the opening of new stores in strategic locations.
“Smart merchandise procurement and optimal inventory planning remain key focus areas to ensure that target margins are achieved without compromising the merchandise quality.
“We will continue to transform our customer experience through updating our stores to world class standards, offering widened merchandise ranges at affordable prices and flexible credit terms,” he said.
Sibanda believes the recovery of the business is premised on the back of improved access to foreign currency through domestic sales to cover import requirements, a stable exchange rate and slower inflation.
Current environment has remained marked by the sharp depreciation of the local currency.
“Some measure of macro-economic instability has been noticed with the increase in cost of basic commodities. The authorities need to step in and implement various measures to help stabilise the foreign exchange market and tame inflation,” he added.
According to Sibanda, active account growth for the USD book grew to 64 000 accounts attributed to various account drive initiatives. The asset quality as at January 08, 2023 was 90,4 percent for the USD book and at 61,5 percent for the ZWL book in current status.
He said expected credit losses (ECLs) as at January 08, 2023 were 4,0 percent of the book compared to 1,9 percent as at 09 January 2022.
“Although this reflects management’s prudent application of the related credit loss accounting standards, the ‘deterioration’ was fuelled by the increase in ZWL interest rates in July 2022 in line with RBZ directives,” he said.
During the period under review, the Edgars chain recorded turnover of $14,6 billion up 41,6 percent from prior year of $10,3 billion and the 1,16 million units sold were up 21,1 percent from 956 000 in the comparative period.
The split between credit and cash sales was 54,5 percent and 45,5 percent respectively while the USD sales had credit sales of 71,6 percent and cash sales of 28,4 percent.
“We revamped our Masvingo store in November 2022. Stock covers closed at 11 weeks,” said Sibanda.
Total sales for the Jet chain were $11,7 billion up 35,58 percent from $8,6 billion achieved in the comparative period.
Total units sold for the period were up 7,9 percent from 1,44 million to 1,56 million. “The chain increased its store count to 36 stores from 31 stores in the comparative period. Stock covers closed at 13,7 weeks,” he said.
In the group’s financial services, the gross retail debtors’ book closed the period at $8,2 billion up 24 percent from $6,56 billion in the comparative period with the USD debtors book ending the year at US$6,6 million while the ZWL book closed the year at $2,5 billion.
The loan book at Club Plus Micronance closed at $698 million representing a 34 percent increase from prior year.
Asset quality remains positive with over 82 percent of the USD book being in current while the ZWL book was 54,5 percent in current with effect of the 200 percent interest rate adjustment still being felt.
“Improved efficiencies in loan approval and disbursement processes have resulted in increased turnaround.
“We have seen an increase in the uptake of loan applications through our digital platforms, which has provided our customers with added convenience,” he said.
Carousel Manufacturing, the manufacturing division, recorded a turnover of $2,4 billion up 102 percent over prior year. Total units sold were down 12,66 percent to 141 000.
“Revenue was adversely affected by depressed sales in the retail space. Management pursued alternative markets mostly in the local corporate wear sector and beyond our borders.
“This initiative resulted in an increase in sales contribution from the open market which accounted for 39 percent of total sales,” said Sibanda.