EDGARS Stores Limited says it experienced a sharp increase in borrowings for the 26 weeks ended July 11, 2021, necessitated by lockdowns with the group accumulating US$190 000 in foreign liabilities.
However, the group’s gross profit margins improved to 46% from 42% compared to the same period last year driven by fresh inventory and increased imports.
In a statement accompanying the group’s financial results for the period under review, Edgars chairperson Themba Sibanda said the company, which was not designated as an essential service provider, lost seven trading weeks due to store closures and reduced trading hours.
“Notwithstanding the challenging environment, positive business sentiments, stable interest and exchange rates and a lag in inflation ensured that our financial services business units continued to perform and remain profitable over the period, ably sustaining operations,” he said.
“The impact of lockdowns on trading was such that it necessitated the increase in borrowings in order for the business to service ongoing commitments such as occupancy and utility costs as well as ensuring that our employees were remunerated on time, the increased borrowings were at an average of 44%, per annum (2020:43% per annum), at the end of June the company had US$190 000 in foreign liabilities which it is able to service from available resources,” Sibanda said.
The group’s debtors book increased to $639 million in June 2021 from $519 million in June 2020.
Sibanda said the book performance remained healthy with 86,3% of the book being current compared to 84,9% in the first quarter.
He said active accounts at 37,4%, while stable throughout the year, declined from the prior year percentage of 44,6% while collections were good at 36,7% of the book compared to 39,8% in Q1.
The Edgars chain unit sales fell by 6% at 344 249 compared to the same period prior year when unit sales stood at 366 720.
Jet chain unit sales of 526 691 were 1% up from the same period last year which stood at 523 034.
For its subsidiary, Carousel Manufacturing, unit sales declined to 74 021 from 121 093 units in 2020 resulting in lower efficiencies relative to last year.
The company’s Club Plus Micro Finances’ loan book increased by 150,4% to $76 million compared to $30,5 million last year.
Sibanda said since the relaxing of lockdowns, trading in the chains had seen significant improvement with an increase in customer footfall.
“We hope that this momentum will be maintained going forward. Traditionally the last quarter of the year contributes 35-40% of annual turnover.
“Management is confident that the profit forecast will be met,” he said. “We are looking to increase our geographic footprint through the opening of new stores as and when the opportunity presents itself”