The Group's turnover has grown by 37% on last year and 10% on budget. This is pleasing in the constrained environment of foreign currency shortages and the negative impact this has on margins and merchandise assortments. Growth in turnover has slowed due to underplanning of winter assortments in the Jet chain and Edgars has been affected by the civil servant involvement in electoral roll verification. Despite these setbacks we are still showing real growth on the top line.
New stores
We have not opened any new stores this year. The project to improve our store environments is ongoing. We revamped Jet Marondera in April this year and the revamp of Edgars Jason Moyo in Bulawayo is in progress. The Edgars Jason Moyo new store will be launched in July. Other planned revamps this year, funds permitting, are Edgars Bindura and Edgars Masvingo.
Retail
Unit sales +13.9% increase over 2017
Retail Sales $ as at end April trading: 37% above last year against input inflation of 28%.
10% above budget.
Margins - Gross margins for Edgars Chain have come down from 46 last year, to 43% this year and Jet has maintained sales margins at 38%.
Finance income: - Finance income (LPC and debtors interest) has come down from $3million last year to $2.3million this year. This is a result of a cleaner debtors book driven by consistent civil servants salaries, enhanced control environment from the ERP system and good efforts from our collections teams.
The retail business’s operating loss has come down from $1million last year to $0.3million this year.
Management continues to focus on cost control.
PAT at $ 1.3 million is 2.5% worse than last year but well above budget.
Factory – The factory loss reduced from $208k in F2017 to $25k in the current year. The factory now trades as a division of Edgars Stores Limited (from January 2018). The drive to export remains at the top of our agenda.
Club Plus: our new micro finance subsidiary, has grown to a loan book of $1million at the end of April 2018. As the business is still at its growth phase, it has made a $54k YTD loss and will breakeven by June 2018.
Debtors: - Current debtors (net of allowance for credit losses ) stood at $21.4million, a 3% increase from last year. With effect from January 2018, the allowance for credit losses is based on IFRS 9.
Number of accounts at end April was 267 611 (2017: 255 080), with 59% being active (April 2017- 63%). Active accounts declined by 28k.
Inventory: Our inventory has grown by 30% over last year. We are adequately stocked to meet winter demand and orders for summer are being placed.
Borrowings: - Total borrowings have reduced to $3.7m from $5.3k last year. $1.3m is payable within 12 months and the balance is payable over the next 3years.
Finance costs have consequently come down by 50% compared to last year. We expect our borrowings to grow to fund the growth of the micro finance business unit and Capex requirements in the retail and manufacturing divisions.
Liabilities: Trade and other liabilities include foreign liabilities of $2.8million and dividend accrual of $1million.
Outlook: The business is committed to delivering its March 2018 promise of 14% and 32% growth in turnover and PAT. The foreign currency shortages continue to pose a challenge to merchandise assortments and the high premiums are a high threat to margins. We are hopeful that the post-election period will bring the much needed positive business environment. We are geared to take advantage of any opportunities that arise.
Linda Masterson
GROUP MANAGING DIRECTOR
7 June 2018