By Alois Vinga
LISTED clothing retailer, Edgars Stores Limited says the obtaining exchange rate stability ushered in by the Reserve Bank of Zimbabwe (RBZ) foreign exchange auction has prompted the increase of more credit to customers.
The exchange rate instability experienced before the inception of the auction system had forced several credit giving stores to reduce purchasing power as well as trimming down the credit repayment periods in a bid to cushion the companies from uncertainty induced losses.
Since the inception of the auction system in June this year, the official exchange rate has stabilised at a premium of around US$1 against $81.50 for more than a month.
As a result, Edgars group chief executive officer, Tjeludo Ndlovu last week announced the move to increase credit.
“The macroeconomic operating environment improved this quarter as characterised by exchange rate stability and slowing inflation. As a result, the company cautiously extended more credit to customers thereby increasing the number of feet in our stores,” she said.
The increase in credit sales presents an opportunity to place the company on a recovery path considering that the firm normally pushes sales through credit.
Meanwhile, Year to date turnover for the trading period to 4 October 2020 was down 36% in inflation adjusted terms.
Units sold for the year to date declined to 1.5 million from 2.5 million last year. Demand for the quarter also declined from 820 000 units last year to 585 000 units.
The Edgar’s chain saw unit sales going down to 453 752 while registering a 50% decline for the year to date against the same period in 2019.
While credit sales registered improvements from 25% in the last quarter to 40% of total sales overall, credit sales remained well short of the historical contribution to total sales of 70% to 75%.
The Jet Chain unit sales of 771 893 were down 43% for the period to date against 2019.
Cash sales contributed 88% and credit sales 12% of total sales for the third quarter compared to 91% and 9% respectively.
Carousel Manufacturing Unit sales were up 143% for the period to date driven by Covid-19 masks in general and by the Chains (Edgars and Jet) summer stocking programmes.
“We expect the recovery observed in this quarter to continue into the fourth quarter if the macroeconomic stability persists. Historically, the last quarter significantly outperforms the first three and accordingly we look forward to a strong performance,” added Ndlovu.