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Enacy Mapakame

Clothing retail chain Truworths reported that sales volumes for the full year to July 2022 increased by 9,5 percent, but slower than expected due to low disposable incomes.

During the year under review, the economy grappled with inflationary pressures, which resulted in depressed demand due to waning consumer spending.

The same period also witnessed challenges emanating from the armed conflict between Russia and Ukraine, which led to global supply chain disruptions at the time economies were just beginning to recover from the adverse impacts of Covid-19.

“Low disposable incomes due to inflation had a negative impact on volumes sold, with customers resorting to buying products in the unregulated informal market at prices which the business could not compete against,” Truworths chief executive Mr Bhekithemba Ndebele said. 

Zimbabwe’s clothing retail business is facing stiff competition from the informal traders selling imported clothes from neighbouring countries at “low” prices rendering local products uncompetitive.

During the period, cash sales accounted for 66 percent of the revenue while credit sales were at 34 percent, reported Mr Ndebele in a full-year financial results ended July 2022.

The group has discontinued credit sales in local currency as the trading environment remained challenging. 

“However, the US dollar credit is considered on a selective basis where there is assurance that the hard currency earnings are guaranteed.

“The increase of the bank policy rate to 200 percent with effect from July 1, 2022 resulted in the business suspending all Zimbabwe dollar credit sales with a consequent reduction in units sold. 

“Zimbabwe dollar cash sales were negatively affected by a shortage of local currency as a result of the tight monetary policy,” Mr Ndebele said.

With the suspension of credit compounded by limited US dollar credit, volumes will “inevitably come down.”

In 12 months period, Mr Ndebele said sales and profitability were also affected by restrictive pricing, which rendered products expensive in US dollar terms and relatively cheap in Zimbabwe dollar terms.

“This was further exacerbated by the widening gap between the official exchange rate and the market exchange rate,” he said.