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Nqobile Bhebhe, [email protected]

LEADING retail chain OK Zimbabwe has begun restocking and has modified its procurement models to restore critical supply relationships with both local and foreign suppliers.

In December last year, the Zimbabwe Stock Exchange-listed group reassured stakeholders of its continued viability as a business, despite experiencing intermittent product supply challenges during the festive season.

The company pledged to restore normal supply levels while working to stabilise the trading environment in collaboration with key partners.

The Group experienced episodes of stockouts during the third quarter ended on 31 December 2024, as daily availability levels dropped to around 50 percent of normal stocking levels.

This sparked speculation that the 83-year-old retail chain, which closed five outlets across the country, was going under.

The firm said the stockouts arose from restricted supplies from manufacturers and distributors.

Added to that, the Group had outstanding and overdue creditors’ balances, which were predominantly denominated in US dollars, against a backdrop of low US dollar sales collection, at times reaching as low as 20 percent of sales revenue.

In a trading update, Group Company Secretary Mrs Margaret Munyuru said the low stocking levels were a direct manifestation of sub-economic pricing arising from exchange rate distortions and suppliers’ need for foreign currency invoicing to cover their operational and raw material needs.

She said suppliers continued to insist on shorter trading terms and, in some cases, prepayments for supplies invoiced in local currency.

This exerted pressure on the business’s working capital and necessitated the need to access short-term funding, she said.

However, Mrs Munyuru said the business has begun restocking its operating units with support from supplier partners as well as financial institutions that continue to assist with short-term funding structures.

“New alternative procurement models have been developed, which include, but are not limited to, a structured stock supply arrangement with a third party for supplier assurance purposes, as the business works to restore critical supply relationships with both local and foreign suppliers.

“The Group is confident of restoring normal stocking levels before the closure of the current financial year,” she said.

Mrs Munyuru said in the quarter under review, power outages worsened, resulting in disruptions to business operations and increases in operating costs as the business relied more on alternative sources of power.

To mitigate rising operating costs, the Group resolved to close four branches in Glen Norah, Kuwadzana 5, Chitungwiza Town Centre, and Robson Manyika Street, all in Harare.

However, she said a review and consideration of the future of branches saddled with the stifling impact of unsustainable operating cost structures and costly licensing requirements is in progress.

In the period under review, volumes decreased by 36 percent compared to the same period last year.

However, on a year-to-date basis, the Group recorded volume growth of 10 percent over the same period.

The reduction in volumes recorded during the quarter translated to a decline in revenue of 36 percent compared to the prior period.