Pick n Pay rides Zimbabwe retail and economic woes
By Memory Mataranyika - Sep 28th 2018, 15:31
Despite rising inflation in Zimbabwe and liquidity challenges that are posing serious challenges to stock procurement, Pick n Pay stores in Zimbabwe have raised revenue from $414 million in 2017 to $487 million this year.
Pick n Pay trades from 55 stores in Zimbabwe and has lined up a program to open more outlets this year. Ebitda earnings rose by 45% to $34.5 million in an economy that is expected to post low growth of around 1% this year.
The Zimbabwean partner of Pick n Pay, Meikles, delayed financials for the full year to March 2018 as it suffered uncertainties from government delays to repay funds owed to the company.
This will be in addition to upgrading and modernization of existing ones, some which already carry the brand of the SA grocer, said John Moxon, chairman of Meikles, the Zimbabwean partner of Pick n Pay in the supermarkets chain.
“In the forthcoming financial year, the segment plans to open a number of new stores and there will be further upgrades of existing stores,” he said.
Meikles is anticipating “consistent growth” in the supermarkets division in the forthcoming year.
The TM Supermarkets and Pick n Pay partnership has previously faced pressure from the government to pick stock from local suppliers while a lobby group, Buy Zimbabwe has also been campaigning for retailers to pick stock locally although most local manufacturers are struggling for capacity.
The tills have been chiming for Zimbabwean retailers, which include bigger rival, OK Zimbabwe as consumers are forced to procure from formal stores which accept digital payments alternatives owing to cash shortages.
“Digital payments have somewhat helped ease payments transactions otherwise the retail market would have collapsed."
“But even so, there are still challenges with accessing forex for imports and supermarkets have to turn to the parallel market where rates are ever rising and retailers have no option but to pass on the costs to consumers through price increases,” said Denford Mutashu, president of the Confederation of Zimbabwe Retailers.
However, the retailers are facing challenges in sourcing for stock while inflation has also been on the rampage, leading to shortages of some foodstuffs. Inflation in Zimbabwe gained 0.54 percentage points to 4.83% in August, the highest rate in over five years, according to data from Zimstats.
The Zimbabwean retailers have to source foreign currency for imported supplies from the parallel market where rates for forex have spiked 110% versus local currency in the form of electronic fund transfers.
The Pick n Pay chain in Zimbabwe did not have any borrowings and is adequately resourced to “implement further growth” in the country. However, its Zimbabwean joint holding company is now under litigation for loan defaults amounting to $5 million, mainly from government-related financial institutions.
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