Edgars records loss

Edgars Stores Limited recorded an operating loss of $1,4 million versus $3 million in the prior comparable period.

The narrowed loss was mainly due to the positive impact of cost cutting measures embarked on by the business in 2016.

The Group managing director, Linda Masterson giving a trading update at the company’s annual general meeting said gross margin was lower than last year at 44 percent (2016 – 46 percent) mainly due to deliberate ‘right pricing’ in the Edgars Chain and sales mix variances.

The factory loss reduced by a notable 40,6 percent from $350 000 in F2016 to $208 000 in the current year.

“Edgars will continue to support the factory and local industry. With effect from this month, Carousel is trading as a division of Edgars Stores Limited, simplifying structures from a tax point of view.”

No new stores have been opened year to date however the group is currently revamping Stanley House, First Street in Harare.

This is expected to be completed in August 2017. Following that the group intends to convert the Edgars Rusape Branch to a Jet store and will also revamp the Edgars Gweru store as soon as funds permit.

“The operating environment remains tough with foreign currency shortages, cash shortages and depressed consumer demand. The business is performing within forecast.”

Unit sales increased by 1,6 percent y-o-y, while retail sales as at end of May were 2 percent above last year.

“We would have done better if we did not have late store inputs. We expect June to be a strong trading month as we are now in a better stock position than we have been for some time- April year to date EBITDA improved by 66 percent from prior year and 36 percent better than budget.

Finance income (LPC and debtors interest) from a smaller debtors book was at $3,1 million versus $3,8 million for same period last year. Reduced borrowings coupled with good cash flow from operations pushed finance costs 22 percent below prior year.

Total borrowings came in at $5.3 million, of which $2 million is payable within 3 months and the balance is payable by April 2018.

“We continue to closely monitor the trading environment and review our targets accordingly. Our March promise remains largely unchanged; gross margins decreased to 44 percent (March promise – 44,9 percent) reflecting the impact of the improved 2017 performance.” The Herald