Food security concerns weigh on clothing sales: Ed...

Food security concerns weigh on clothing sales: Edgars

Nyashadzashe Ndoro

Chief Reporter

Edgars Stores Limited, a leading retail clothing chain in Zimbabwe, has reported a decline in sales due to the challenging economic environment and food security concerns.

According to the company's unaudited results for the 26 weeks ended July 7, 2024, total group units sold decreased by 22.4% compared to the same period last year. Revenue declined by 15.4% to US$16.1 million.

The chairman of the Victoria Falls Stock Exchange listed company, Thembinkosi Nkosana Sibanda, attributed the decline to significant pressures on disposable incomes, which have led to reduced retail volumes.

"Significant pressures on disposable incomes, resulted in reduced retail volumes. Under the circumstances, food security issues generally take precedence over clothing," Sibanda noted.

"As a result, total Group units sold declined by 22.4% from 1.09 million to 0.85 million compared to the same period last year. Revenue decline was contained at 15.4% over the prior half year at US$16.1 million against US$19.0 million in 2023."

The company's retail merchandise revenue decreased by 12.8% to US$13.2 million, with the Edgars chain recording a 5.3% decline in turnover to US$8.3 million. Jet chain sales declined by 17% to US$6.2 million.

Despite the challenges, the company managed to increase profit before tax by 169.6% to US$0.16 million, driven by aggressive margin enhancements and cost containment efforts.

The chairman expressed appreciation for management and staff's efforts in sustaining the business in a difficult operating environment and thanked customers, suppliers, and stakeholders for their ongoing support.

The company remains cautious about the outlook, citing ongoing liquidity challenges, elevated interest rates, and the impact of the El Nino-induced drought on agricultural output and power generation.

"The drought headwind will remain a factor through to April 2025, suppressing consumer demand. Food imports are likely to further strain and impact USD liquidity in the local financial market. A normal to above normal rainfall season for 2024- 2025 is being projected, and this should assist the recovery of the economy in the outlook period," Sibanda noted.