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Edgars revenue for four months to April this year increased 12,6 percent compared to the same period last year but was 2,5 percent below budget

Martin Kadzere Senior Business Reporter
ZIMBABWE Stock Exchange-listed clothing retailer Edgars Stores Ltd has ventured into financial services in a move analysts say is aimed at diversifying its revenue streams.

The company has started offering an individual funeral insurance policy which is underwritten by CBZ Life Limited. Among the benefits of the policy is a lump sum paid on the death of the principal member, spouse, children of the member or other dependants.

With the extensive branch network, it makes it easy for customers to access the new service.

The company’s managing director, Ms Linda Masterson, said despite the tough operating environment, Edgars was performing fairly well.

She told an annual general meeting last week that revenue for four months to April this year increased 12,6 percent compared to the same period last year but was 2,5 percent below budget

Retail sales were trailing the budget by 2,8 percent but were 8,8 percent above 2014.

The factory division made a profit of about $84 000 year to date. Gross margins were lower than last year at 44 percent (45,3 percent in 2014).

Ms Masterson attributed lower margins to high sales in the Jet (lower margin) chain and lower sales in the Edgars chain.

The company made an operating loss of $1,6 million versus $281 000 profit for same period in 2014. Finance income was $3,2 million above $1,1 million for same period in 2014.

Finance costs were 40 percent ahead of last year, but well within current year budget. Profit after tax was ahead of budget for the period to date at $418 000 and was largely driven by finance income.

The number of accounts as at April were 234 511, with 72 percent being active. The Hospital Cash Plan offered to Club members continues to grow, with membership now at 124 000. Edgars chain closed April overstocked at 14,2 weeks cover and Jet stocks are balanced and indicative of the chain’s good performance at 10,9 weeks cover. Total borrowings were $20,3 million, of which $9 million is current and the balance payable after April 2016. Finance costs were 4,6 percent of turnover

“Overall, we continue to closely monitor the trading environment and review our targets accordingly.

“Our March promise remains largely unchanged; gross margins decreased to 44 percent (March promise, 44,9 percent) reflecting impact of Jet performance.”

Edgars did not open a new store during the period but is consolidating existing operations.