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Business Reporter
Edgars Stores retail sales for the first half of 2014 increased by 8 percent as profitability was boosted by improved sales due to an extended payment period.The sales came in stronger at $29.5 million from $27 million last year while the group’s profit before tax for the 26 weeks’ trading was unchanged at $1.6 million.

Earnings per share went down 6 percent to 0.41 cents while trade and other receivables increased by 19 percent to $22.7 million during the interim period.

Edgars said that through strategic initiatives such as re-launching of  The Club magazine  and extended payment period to 12 months from six months, the group managed to recover from a weak first quarter performance.

“Financing the 12 months to pay credit option in the Edgars chain will lead to improved overall debtors’ statistics, less bad and overdue debt, a growth in the debtors’ book, an increase in interest income and slightly reduced cash inflows,” Edgars said.

In the Edgars chain, new stores were opened in Victoria Falls and downtown Harare, bringing the total number of Edgars branches to 28 (2013; 24).

This increase in branches was also accompanied by turnover increase, which surged by 7,4  percent (like-for-like, 3 percent) although profits declined by 9.7 percent.

July trading was strong and cost control efforts started bearing fruit resulting in improved profitability.

About 89.9 percent of Jet sales in the first half were on credit (2013; 89.4 percent) and the stock cover was 11.7 weeks.

Jet chain contributed 18.8 percent to group turnover (2013; 18.2 percent). Total turnover for the 25 stores (2013; 18), was 12.3 percent above last year (like-for-like; -18.0 percent).

July trading was more buoyant while profitability and old store growth rates improved. Jet was seriously affected by price-based competition from informal traders and unbalanced assortments arising from rapid expansion last year.

“Concerted efforts to improve pricing and product assortment are underway and we expect a turnaround for the chain in the last quarter,” Edgars said.

Closing stock cover was 12 weeks, which is a solid improvement from the 16.7 weeks last year.

Edgars said combined debtors book had 203,728 (2013 — 188,447) accounts at the end of June; of which 71,3 percent were active (2013 — 72.5 percent) while provision for doubtful debts of $517,020 represents 2.3 percent of gross balances.

Average handovers amounted to 0.4 percent of lagged debtors and 1.6 percent of lagged credit sales.

Recoveries from handovers averaged 34.6 percent of debts handed over. Edgars is confident of the adequacy of its provision for doubtful debts.

The factory continues to improve its performance, contributing $264,148 to group’s profit before interest and tax.

Production volumes increased to 170,197 units, an increase of 35 percent from 126,221 units in the first half of 2013.

The clothing retail chain said that it was committed to supporting the local clothing manufacturing industry and would continue to retool this business division to improve its productivity as well as enable it to compete regionally.

“The enterprise resource planning renewal project has gained momentum and the bulk of capital expenditure in the second half of the year will be directed towards this project.

“We will continue to be innovative to minimise the negative impact of the challenging operating environment,” Edgars said.

The group said that trading had picked up since April and it expected to see positive bottom line growth for the year.

“We are confident of our ability to continue to fund the needs of the business. Overall, our borrowings have decreased as at the half year end,” Edgars said.