Listed clothing retailer, Edgars Limited says it will utilize monies raised from its just concluded rights offer to take advantage of new growth opportunities.
The company raised nearly ZWL$70 million in the rights offer.
Said group CEO Tjeludo Ndlovu:
“As the rights issue comes to a close on 21 August 2020, after an extension necessitated by the unexpected closure of the Zimbabwe Stock Exchange, almost all shareholders took up shares on offer.
“The Group needs to be well positioned to respond with agility to opportunities and challenges that may arise to support its growth ambitions.
“The board and management are aware that strong companies will capitalise on growth opportunities whilst maintaining financial exibility to emerge from this crisis ready for growth, hence the rights issue proceeds will be directed at enhancing growth capabilities.”
The group’s operations have been affected by the COVID-19 pandemic.
Year to date turnover for the trading period to 5 July 2020 declined 43% compared to the same period last year in hyperin ation adjusted terms, affected mainly by the COVID-19 induced lockdown which saw all stores closed in April, said management.
Units sold for the period to June declined from 1.6 million to 963 000 compared to same period last year.
In ation adjusted EBITDA was down 22% compared to the same period last year.
Retail inventory as at the end of June 2020 declined 7 % further from March levels.
“With improved access to foreign currency from sales and the foreign currency auction, retail chains can now improve on merchandise assortments,” said the CEO.
“The Group anticipates an extremely constrained consumer environment and therefore, the order book remains carefully managed and increased promotional activity is anticipated to manage the current stock.”
The Group also said borrowings at end of the quarter were ZWL$132.6 million of which ZWL$107.6 million is short term debt.
Finance costs increased compared to last year in line with increased interest rates and borrowings.
Trade and other liabilities were 722% up on last year.
“Management’s focus is on e-commerce solutions to reduce disruptions caused by lockdowns on sales.
“Management are also applying strategies aimed at managing inventory, credit and expenses.
“The credit landscape remains challenging under hyperin ationary conditions and management will apply its skills to mitigate the overall effect credit will have on inventory levels and sales,” said Ndlovu.
The Edgars subsidiary, recorded unit sales of 273 193 were down 55.7% for the half year against the same period in 2019.
Credits sales declined in the second quarter, contributing only 25.1% of total sales compared to a contribution of 71.2% for the same period last year as both management and customers took precaution on the level of credit exposure.
“Offering credit to customers remains the mainstay for the Edgars chain’s performance thus credit management in this hyperin ationary environment is critical in order to preserve value and
grow sales,” said management.
The Jet chain’s cash sales contributed 91.1% and credit sales 8.9% of total sales for the second quarter.
The chain anticipates that the second hand clothing market will remain constrained due to COVID-19, further positioning Jet to capture market share.
Unit sales were down 46% for the period to date against 2019.