Retail giant, OK Zimbabwe Limited continues to sing the blues after posting significant sales volumes drop yet again in the third quarter (Q3) to December 2023, its latest trading update shows.
The group has been struggling to make-do with compliance with regulations governing the local currency which resulted in high instore prices and loss of competitiveness especially against unregulated parallel markets.
Consequently, persistent price changes adversely impacted on consumer demand and supply dynamics.
The depreciating ZWL has created a premium averaging 50 percent between the official and parallel market rates against the USD with formal retail players compelled to stick to the sub-economical official rates.
In its Q3 trading update, the group volumes declined by 32 percent for the quarter versus prior year and by 28 percent for the 9 months ended 31 December 2023.
“This was attributed to stringent supplier payment terms on Zimbabwean Dollar denominated purchases as well as and credit limitations on foreign currency denominated purchases which affected stock availability and pricing dynamics during the quarter,” said group company secretary Margaret Munyuru.
Group revenue for the quarter in historical cost terms however grew by 535 percent to ZW$ 490.5 billion.
For the nine (9) months ended 31 December 2023 grew revenue went up by 501 percent to ZW$ 1 trillion in historical cost terms.
“The business has adopted a structured cost containment programme to align overhead costs with business performance.”
The group is seeking to turn its fortunes come the end of the current financial year after it posted a half year interim loss of $9.2 billion in September last year owing to significant exchange losses on its foreign denominated liabilities and leases amounting to ZW$ 32.4 billion which negatively impacted on profitability.
The group has since begun the process of liquidating foreign currency denominated liabilities and renegotiating foreign currency-based leases to reduce the impact of exchange losses going forward.
“Looking ahead, the Group remains optimistic about its future prospects and recognizes the need to adapt to the changing operating environment. The business is focusing on delivering value to its customers by enhancing customer experience, executing fair pricing, improving market presence and optimizing operational efficiencies for long term sustainability,” said Munyuru.
Formal retail players like OK Zimbabwe and TM Pick n Pay have been struggling to regain lost market share to the ever-growing informal retail sector that continues to flourish with minimal regulation.
