MEIKLES Limited will inject $4 million into its retail division which it expects to return to profitability during second half of the current financial year, the group has said.
Meikles will use part of the funds it is owed by the Reserve Bank to build up inventories at its retail division.
The division consists of Meikles Stores, Barbours, and Meikles Mega Market.
The group said the division’s operations was severely constrained due to inadequate working capital following losses incurred as a result of stringent price controls imposed immediately before the introduction of multi currency system in 2009.
The stores were forced by regulations to sell inventories at prices below cost.
In recent years, the group has operated without any benefit from its deposits held at the central bank.
“The retail division has been unable to invest in inventories or unit improvements as it should in a dynamic environment and losses have been made as a result,” said Meikles.
“The group will now have access to its funds held on deposit at the Reserve Bank.
“As a result approximately US$4 million will be injected into the retail division, which will have a material impact on the second half of the current financial year.
“We believe that the division will return to profit and a positive cash flow while growing its market share.”
The division said it would focus on providing affordable products to the mass market while providing high-end fashion clothing and accessories through Barbours.
“Sales at Barbours are up on the previous year while sales at Meikles Mega Markets have been growing very rapidly.
“The division is in the process of rationalising costs through the centralisation of its head office structure and combining all activities under a single structure and command with key focus on the provision of the required skills.”
The Meikles Stores will operate in all their traditional properties in Zimbabwe, but in space that will be smaller and more focused than in the recent past, said the group.
The remaining space in each unit will be occupied by Meikles Mega Market and in certain units by TM Supermarkets.
Meikles Mega Market is a rapidly growing participant in the Zimbabwe retail environment and more units will be added in the high density suburbs.
Meikles has also announced that it will establish hair salons in spaces that are not being fully utilised by TM and Meikles Mega Market.
“We view this as a rapidly growing market,” said the group.
“We expect the beauty and hair salons to make an immediate impact and contribute positively to our profits and cash flows while making efficient use of our space.
“We have given this top priority and expect the first salon to be opened in October and others to be launched before the end of the year.
“Shareholders will witness these developments, which are now well underway, and will result in a revitalised retail division.”