Zim retail results reflect consumer pain - Zimbabwe
Fin24 - Sep 22nd 2014, 13:45
Harare - The Zimbabwean economy has continued to weaken further, at least as measured by results that were released on Thursday by four Zimbabwe Stock Exchange-listed companies.
Clothing retailer Edgars Store, owned 38.33% by South Africa’s Edcon, was one of the companies that released their interim results on Thursday.
Analysts say the retail sector is an important economic barometer as it is directly linked to the consumer’s pocket.
Analysts at Lynton Edwards Stockbrokers (LES) said the results from Edgars showed that the economy is under strain with consumers struggling to purchase, let alone service, their debts.
“While Egdars managed to grow sale of merchandise by 8.48%, the debtors book grew by a massive 19.47% reflecting that the quality of sales the Group is making is deteriorating,” said the stockbroking firm.
The number of active customers also declined to 71.3% down from 72.5%, which again points to a constrained consumer.
Saved by 12-month credit term
“The situation could have been worse had Edgars not increased their credit terms to 12 months from six months, a move that lessened the instalment burden,” said LES.
Half-year results to June 30 for cement maker Lafarge also reflected a slowdown in economic activities.
The volume of cement sales was 12% lower than the same period last year, arising from the low demand in the company’s traditional markets.
The fall in sales volumes and revenue comes despite the fact that Zimbabwe has a massive housing backlog of over a million as well as a pressing need for overall infrastructural rehabilitation and development.
The Zimbabwean government has not been able to undertake any meaningful infrastructural development as 70% of its revenue goes towards paying salaries for government workers.
Property counter Zimre Property Investments also reported results that reflected a struggling economy with voids for the half-year period to June 30, jumping to 20% from 10.92% as at December 31 2013.
Office rent per square metre came down to US$5.90 down from $7, but this did not help much as tenants still struggled to pay with rent collection levels coming down to 86% from 95% prior year comparative.
It was the same story for brick manufacturer Radar Holdings, which saw its sales volumes coming down by 9%.
“The results we saw this week reflect a deteriorating economy characterised by prevailing liquidity crunch which has severely affected disposable incomes,” said LES.From Fin24.com
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