OK Zimbabwe suffers knock in volumes
ZIMBABWE Stock Exchange-listed retailer OK Zimbabwe suffered a knock in volumes particularly in the first half of 2020 due to COVID-19 and projects the pandemic will be prevalent beyond 2021.
Already, the pandemic coupled with a number of macroeconomic challenges, chief among them foreign currency shortages, have seen the group report a 15% slump in sales volumes for the nine months of its current financial year to December 31, 2020.
In a trading update for the third quarter and nine months, OK Zimbabwe said revenue grew by 27% for the quarter and 3% for the year to date in inflation-adjusted terms and by 536% and 601% for the quarter and year to date respectively in historical terms.
“Sales volumes grew by 7% for the quarter, but were below prior year by 15% for the nine months,” the company said in the statement, adding that while the year to date volume was negative, this was an improvement from the retreat by 26,9% reported for the half year ended September 30, 2020.
Business in the country suffered huge knocks in the first half of 2020 largely as a result of a hard lockdown measures announced at the end of March.
Movement of people was restricted while consumer spend fell.
OK Zimbabwe said despite the challenges, it continued to operate profitably and margins for the third quarter were consistent with the performance reported for the half year ended September 30, 2020.
Going forward, the company said, the COVID-19 pandemic was expected to persist up to the end of the financial year and beyond.
“While the curtailment of non-essential business activity and restrictions on people mobility impact both the supply chain and customer activity in our stores, the business has experienced reasonable levels of trade,” said the group, which is part of essential services as it is in the food and provisions sector and is, thus allowed to operate though under tight conditions.
The company also forecast improved consumer spending power and consumption on account of expectations of a bumper harvest due to the good rainfall received this agricultural season.
OK Zimbabwe said the relaxation of COVID-19 lockdown restrictions improved the operating conditions for the business during the third quarter to December with extension of trading hours and free movement of people resulting in increased footfall into the stores.
“The foreign currency auction system improved availability of foreign currency leading to relative stability of the exchange rate as well as improved supply and prices of goods. Under these conditions the group was able to stock up its stores adequately in readiness for the quarter as well as the festive season business activity,” the company said.