Edgars Stores Limited releases its 2016 interim financial results for the period ended 9 July 2016. Below are excerpts from the results and Chairman's statement.
Consumer demand continued to weaken throughout the period due to the combined effects of drought, liquidity constraints, business failures and delayed or non-payment of salaries. Revenue declined 23% on last year to US$23.1 million.
In the period under review management's focus has been on the following key strategic initiatives aimed at future profitability:
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Staff rationalisation.
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Restructuring and remodelling the business to improve accountability, productivity and differentiation between the chains.
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Preparation towards implementation of the new I.T solution.
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Cost cutting measures.
These initiatives have resulted in extra once-off costs amounting to US$0.9 million being incurred. This included retrenchment costs of US$0.65 million, US$0.2 million of which relates to Manufacturing...
Retail Operations
Edgars Chain: Sales for the half year were US$14.5 million (2015: US$21.5 million) a 31% drop. Cost containment efforts to counteract the impact of these low sales are being made and the full benefit will only show in the second half of the year and in 2017 and beyond...
Credit management
Edgars' debtors are at US$20.4 million (2015: US$28.9 million) after a doubtful debt provision of US$2 million (2015: US$1.7 million)...
Capital Expenditure
Spend to date was in respect of:
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Information technology: US$1 043 355
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Plant, Vehicles and Machinery: US$ 229 375
The go-live date for the new Enterprise Resources Planning (ERP) Solution is set for October 2016...
Manufacturing
The factory made a loss of US$0.3 million for the period (2015: profit US$0.06 million)...
Financing & Cash Flow
Gearing reduced from 66% to 58%. Borrowings at US$15.4 million (2015 at US$23.2 million) are US$7.8 million less than last year...
Outlook
We will continue to focus on providing excellent service and desirable product to our customers at very good value. We expect a more profitable second half and the learner business model currently in place will help us meet the less than favourable economic conditions.
Dividend
Given our level of borrowings and the adverse environmental conditions your company will not declare a dividend.
Appreciation
I am grateful to board colleagues, management and staff for their dedication, our customers for their loyalty and our landlords, bankers and suppliers for their continued support.
T.N Sibanda
Chairman
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