Edgars maintains solid financial position

Edgars 17 March 17

Oliver Kazunga, Senior Business Reporter
LISTED clothing retailer, Edgars Stores Limited has maintained a sound financial position allowing the company to meet its short-term financial obligations driven by reduction in net borrowings and enhanced credit management.

An analysis of the company’s unaudited abridged results for the half year ended July 9, 2017, shows that its current ratio during the period improved to 2.4 from 2.0 during the same period last year.

This means that the Zimbabwe Stock Exchange-listed firm is a going concern as it has the ability to meet its short-term debt despite the challenging operating environment.

Total current assets for the period under review were $37.8 million up from $36 million in the comparable period in 2016. During the period under review, Edgars Stores Limited managed to reduce its total current liabilities to $15.9 million from $17.9 million.

Chairman, Mr Themba Sibanda said good merchandise assortments and resurgent consumer spending assisted the group to end the first half on a positive note.

“Revenue of $24.7 million (2016:$23.1) increased by seven percent from the same period last year. Group gross profit margin of 43 percent reduced by one percent from the same period last year,” he said.

The clothing retail group recorded a profit before tax in the six months ended July 9, 2017 amounting to $0.9 million compared to $0.3 million loss during the comparative period last year.

“The Enterprises Resource Planning (ERP) solution enhanced controls over credit policies. This, together with improved debt collection and policy changes in credit management has resulted in savings of $1.5 million on last year.

“We anticipate savings of at least half this amount in the second half of the year. Other operating expenditure increased due to go-live ERP continuing support in 2016,” said Mr Sibanda.

During the period under review, the clothing company reduced its net borrowing by $1.8 million to $9.4 million. On the outlook, Mr Sibanda said 50 percent of their products were sourced locally, and the prevailing foreign currency shortages would impact their product ranges particularly in the fourth quarter.

“We will pursue all options to obtain key imported products for our customers and inputs for the factory while actively implementing importing substitution where feasible. The biggest obstacle to import substitution is limited allocation of foreign currency to local suppliers of fabric and trim imports,” he said.


Article Source: The Chronicle