Zimpapers Logo

Business Reporter
FURNITURE retailer Pelhams is forecasting a return to profitability in the short-term after incurring a loss of US$1,12 million in the half year to September 30.In order to return to profitability by year end, management will have to realign overheads as well as continue with research and manufacturing of exclusive lines to increase margins and conclude fund raising initiatives.

Costs realignment had been the primary focus for the year as the structures had to match sustainable revenue streams.  A profitable second half is forecast, supported by credit sales on the back of new and cheaper facilities, focus on higher margin products and reduced operating costs.

The group said the focus for the second half will be securing working capital facilities in order to boost stock levels and revenue.
In a statement accompanying the results, the group said part of the measures were implemented in the first quarter subsequent to the year end.

Revenue in the six month period was 60 percent down to US$1,7 million due to reduced stock levels across branches as well as reduced sales from civil servants disposable income.

Huge administration costs of US$1,3 million saw the group post an operating loss of US$946 659.   The group plans to reintroduce “small whites” such as microwaves, kettles, etc in the product range. “This will reduce pressure on the funding gap, said chairman Mr  Tawanda Nyambirai.

The group had managed to deal with expensive legacy debt and had done away with a top heavy employee structure.  In the period, three branches were closed in the period. These are Bradlows Speke, Banet & Harris Arundel, Banet & Harris Borrowdale and the Bulawayo warehouse.

The group had managed to reduce its borrowings to US$400 000 from US$1,2 million in the comparable year ago period.  As a result, finance costs were halved to US$554 024 from US$1,12 million last year.

On the balance sheet, current liabilities exceeded current assets by US$2,46 million at US$6,32 million.    Credit sales in the six months contributed 67 percent compared to 60 percent in the year ago period.