Listed clothing retail group, Edgars Stores Limited, recorded decline in sales volumes across chains for the second quarter to 5 July, 2020 on the back of reduced trading hours due to Covid- 19 induced restrictions.
Units sold for the period to June fell 40 percent to 963 000 compared to 1,6 million recorded during the same period last year.
At Edgars chain, unit sales went down 55,7 percent to 273 193 for the half year against the same period in 2019.
According to the group, credits sales declined in the second quarter, contributing only 25 percent of total sales compared to a contribution of 71 percent for the same period last year as both management and customers took precaution on the level of credit exposure.
Offering credit to customers, however, remains the mainstay for the Edgars chains’ performance thus credit management in a hyper-inflationary environment is critical for the group to preserve value and grow sales.
Unit sales at Jet chain were down 46 percent for the period to date against 2019.
Of this, cash sales contributed 91 percent and credit sales accounted for 8,9 percent of total sales for the second quarter as customers continue to favour transacting in cash.
The chain anticipates that the second hand clothing market will remain constrained due to Covid-19, which will help Jet to further consolidate market share.
Carousel Manufacturing, however, recorded a percent growth in unit sales for the period to date compared to 2019 spurred by production of face masks.
Carousel has benefited from the introduction of the foreign currency auction through access to foreign currency for the importation of fabric and machinery for retooling.
Production of outerwear remains constrained by the weak demand of product at retail.
Total year to date turnover for the trading period to 5 July, 2020 declined 43 percent compared to the same period last year in inflation adjusted terms, affected mainly by the Covid-19 induced lockdown that saw all stores closed in April.
Earnings before interest, tax, depreciation and amortisation (EBITDA) were down 22 percent compared to the same period last year.
According to the group, retail inventory as at the end of June 2020 declined 7 percent 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. 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,” said group chief executive officer Tjeludo Ndlovu in a trading update for the period under review.
Borrowings at end of the quarter were $132,6 million of which $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 percent up on last year.
The group’s focus will be on e-commerce solutions to reduce disruptions caused by lockdowns on sales as well as applying strategies aimed at managing inventory, credit and expenses.
“The credit landscape remains challenging under hyper-inflationary conditions and management will apply its skills to mitigate the overall effect credit will have on inventory levels and sales,” she said.
She added the group would continue to monitor the operating environment that is already challenging and uncertain due to effects of Covid-19 coupled with already existing challenges of high inflation and low disposable incomes.
Indications from Edgars are that sales were trending upwards since lockdown relaxation but have now been hampered by shortened trading hours enacted by government in July, as customers are unable to access our outlets on time.
But selling in US dollars and the introduction of the foreign currency auction has brought some stability as the group can now fund the importation of inputs and machinery to retool its operations.