Edgars slams Zim govt over unclear currency and economic uncertainty

Edgars Stores Limited, a Zimbabwe Stock Exchange listed clothing retailer, has expressed frustration with the government’s unclear currency reforms, which have led to economic uncertainty and pressure on disposable incomes.

In its trading update for the first quarter ended April 7, 2024, the company reported a decline in sales and volumes due to the challenging operating environment.

Edgars’ Chief Executive Officer, Sevious Mushosho, expressed concern over the government’s handling of the currency reforms prior to the introduction of the new currency, the Zimbabwe Gold (ZWG).

He expressed concern over the lack of clarity in the currency reforms, which he said led to economic uncertainty and pressure on disposable incomes.

“The period under review was characterised by economic uncertainty because of steep depreciation in the local currency and lack of clarity in the manner and format of the anticipated currency reforms,” Mushosho said.

However, despite the difficulties, Edgars managed to consolidate its control over its supply chain by partnering with local suppliers and increasing production at its Carousel manufacturing unit.

Mushosho noted that the government’s efforts to support local manufacturing industries and its actions against smuggled new and second-hand clothes are encouraging.

“The Group is encouraged to note efforts by the Government in supporting local manufacturing industries and its actions against smuggled new and second-hand clothes.

“To differentiate our business from small mall traders and boutiques where imitation products are often sold, the business started production through its partners in Turkey, very high quality and exclusive merchandise to cater for the upper income segment of the market.

“This merchandise is being sold at selected stores in Harare and Bulawayo. This has created a huge excitement amongst our customers who are now seeing great value created by their favourite fashion retailer,” the group noted.

Edgars’ financial performance showed a decline in traded units by 18%, but sales only dropped by 12%, and the margin went up by 15%.

The company’s retail performance was also affected, with volumes in the Edgars chain down 12% and sales down 2%. However, the margin was up 5% due to a deliberate strategy to procure high-quality merchandise at a lower cost.

The company’s manufacturing unit, Carousel, reported a 204% increase in units sold, and the business acquired new machines worth US$1m as part of its retooling exercise. Edgars also reported a decline in its debtors’ book and an improvement in asset quality.

The company plans to open new stores and introduce Express Stores to focus on the lower-income segment of the market. The retooling of Carousel is expected to increase production volumes, making the company’s merchandise more competitive in the market.

Edgars, among other leading retailers in Zimbabwe, has been complaining to the government since last year about the “unfair” competition that they face from informal traders who “do not pay taxes”.