APPAREL retailer Edgars Stores Limited will close two retail shops this year as part of a restructuring programme to shed loss making units.
The company’s group managing director, Ms Linda Masterson, told The Sunday Mail Business that loss-making Edgars Chipinge and Jet Kariba will be affected since they no longer fit the business’s model.
There are however no plans to open any new outlets in the year.
“The stores that we are closing are Jet in Kariba and Edgars in Chipinge because they are loss-making,” she said on the sidelines of the group’s financial results presentation in Harare.
During the review period, Edgars managed to spread its tentacles to the informal sector where it sold products worth $1 million on credit.
This contributed at least 4 percent of Jet’s total turnover and 1,8 percent towards Edgar’s turnover.
“We sold about a million dollars worth of products to informal sector customers last year, which was about 4 percent of Jet turnover and 1,8 percent of Edgars turnover .“The bad debts are higher than they are in the formal sector, but so far it’s performing within expectations,” she said.
Ms Linda Masterson said the continued sale of second-hand clothing continues to affect Government.
Edgars’ revenues for the year ended January 30, 2015 fell 12 percent to $63,9 million from $73 million a year ago due a 24 percent drop in sales at Edgars.
The decline in sales was attributed to a high base of extended credit that was launched in the prior year.
Profit in the period dropped to $4 million from US$5,2 million a year earlier.
But turnover at Jet Stores jumped 23 percent to $19 million.
It contributed 31 percent to group turnover.
Tight conditions during the Christmas trading period meant Edgars and Jet stores ended the year overstocked.
Total gross write-offs for the year amounted to $2,2 million which equates to 4,1 percent of lagged credit sales and 0,6 percent of lagged debtors.
The group said despite the deterioration in disposable incomes, customers have been paying although not as timely as in the past.