Zimbabwe’s largest retail group, OK Zimbabwe, said sales grew 167 percent during the first quarter of the current financial year although the macro-economic challenges had a severe knock on effect on the business.
Net sales recorded amounted to $398,9 million and the group managed to maintain gross profit margins at same level as those reported for the year ending March 31, 2019.
Erratic power supplies that escalated this year, deterioration of the exchange rate and the resultant hike in prices posed challenges for the business as the market experienced dwindling disposable incomes.
“The macro-economic environment was unstable as it was characterized by the deterioration in the exchange rate and the resultant escalation in prices of goods.
“We experienced difficulties in accessing foreign currency to import goods and our suppliers had the same problems. As a result, we did experience erratic supply of some goods but suffice to say our stores remained reasonably stocked,” said OK Zimbabwe in a trading update.
Despite the supply challenges, OK Zimbabwe managed to hold its annual OK Grand Challenge Jackpot Promotion which is the biggest promotion in the country.
Escalation of prices during the quarter under review was also the order of the day, as foreign currency rates continued to tumble on the illegal parallel market.
According to figures from the Zimbabwe National Statistics Agency, annual rate of inflation for the month of June is pegged at 175 percent from May’s 98 percent.
However, there has been stability in prices in July following the introduction of local currency and accompanying policy measures.
In June, Government announced the abolishment of the multi-currency system for local transactions.
Like any other local businesses, OK Zimbabwe is also being affected by power blackouts that are being experienced across the country.
“Operations such as in-store bakeries are some of the hardest hit. The erratic power shortages feared to be increasing overheads for businesses and operating costs.
A week ago, Zimbabweans battled mobile network challenges as the Econet mobile network system experienced a blackout due to power outages, which also affected mobile money transactions.
“The lack of electricity is affecting operations. We operate our stores on generator power and this is costly in both fuel and repairs.
“This has forced us to rationalise our opening hours but making sure that we are open at peak times so that customers are not inconvenienced,” said OK Zimbabwe.
Despite the increasing cost pressures, management remains upbeat of meeting its profit targets for the financial year.
The group will continue with its stores rehabilitation programmes to enhance customer experience while new store opening also remain a key focus where it makes economic sense.
The retail giant anticipates opening of its Karoi store, which is already under construction.