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Edgars

Kudakwashe Mhundwa Business Reporter
Clothing retail giant, Edgars Stores says merchandise sales for the 52 weeks to January 8, 2017 dropped 19 percent to $50,3 million compared to $62,3 posted in the same period the prior year.

In a statement accompanying the group’s financial results, chairman Themba Sibanda said the fall in sales in the period under review was due to a drop in consumer demand.

“Depressed consumer demand for clothing together with stock movement challenges we faced in the transition period from the old system to the new enterprise resource planning impacted on our performance in 2016,” he said.

Likewise, revenue for the period under review dropped by 18 percent to $52 million from $64 million in the same period a year earlier.

Retail operations for Edgars Stores declined as sales for the period under review dropped to $32,2 million from $42,7 in 2015. The group traded from 27 stores compared to 28 the previous year.

As a result, consolidated profit amounted to $321 000 from $6,2 million in 2015, which saw earnings per share also tumbling to 0,21 cents from 1,54 cents in 2015.

In the period under review, the Edgars Chain implemented cost cutting measures which resulted in expenses dropping by $4 million.

“During 2015 and 2016 we embarked on a highly focused cost cutting exercise.

“Our achievement of this is illustrated by the fact that 2016 costs (excluding once off costs) are lower than 2015 expenses by four million thus achieving our commitment to go into 2017 with a lean business model,” said Mr Sibanda

Edgars manufacturing unit also recorded a trading loss for the year of $400 000, which the group attributed to reduced demand from its retailers.

“The loss was as a result of reduced demand from group retail operations, production is also being affected by the limited allocation of foreign currency to the productive sectors,” he said.

The retailer said Edgars Chain debtors were $18,7 million, after an allowance for credit sales of $1,8 million.

Net write offs for the period averaged 8 percent of lagged credit sales and 0,8 percent of lagged debtors.

Jet debtors stood at $4,4 million, after discounting for credit losses of $400 000.

Net write off came in at 6,1 percent of lagged credit sales and 1 percent of lagged debtors.

The company did not declare a dividend due to its level of borrowings, which stand at $11 million.

Mr Sibanda highlighted that focus in 2017 was on growing a sales through store improvements, marketing campaigns, stuff trainings, improved supply chain management and merchandise assortments.