Source: Meikles says pricing law repeal will catalyse retail sector growth – herald
Nelson Gahadza
Meikles Limited says the repeal of Statutory Instrument (SI) 81A through SI 34 of 2025 marks a turning point for formal retail, restoring fair trading conditions and enabling price competitiveness in US dollar terms.
Through SI 34 of 2025, the Government removed penalties for businesses that priced goods and services above the official exchange rate and granted businesses greater pricing flexibility, allowing them to adjust prices based on market conditions.
Acting group chairman Mr Fayaz King, in a statement of financials for the year ended February 28, 2025, said the group’s supermarket segment was well-positioned, with a healthy liquidity profile to capitalise on these improvements.
“Revenue performance during the first quarter of the new financial year demonstrated positive momentum, with foreign currency sales accounting for 32 percent of total supermarket revenues, an improvement from 27 percent recorded in the same period last year,” he said.
He added that unit sales volumes rose by 8 percent, reflecting sustained consumer demand. “Notably, the core grocery category, which represents the bulk of our volume mix, continues to deliver solid unit growth.
“Liquor sales have shown particularly robust expansion, supported by the strong economic activity in smaller stores located in mining towns where local economies are buoyed by mining operations,” said Mr King.
However, during the year under review, group revenue declined by 2 percent to ZiG12,5 billion from the previous year of ZiG12,8 billion in inflation-adjusted terms, while reflecting a 29 percent growth in historical cost terms.
Mr King said revenue for the supermarket segment declined by 2 percent, despite a 1 percent growth in units sold. Resultantly, the supermarket segment contributed 99,6 percent of the group’s revenue and the gross profit margin was 22,69 percent and almost identical to 22,61 percent achieved last year.
“In line with our strategic priorities, the supermarkets segment is actively deploying capital into high-impact areas aimed at maximising growth and enhancing customer loyalty.
“Targeted investments are being made in high-potential stores in mining towns, liquor category development, and improvements to the supply chain for remote locations,” he said.
Additionally, Mr King said management is rigorously evaluating expansion opportunities arising from market developments.
He said on the properties front, the refurbishment and expansion of assets, particularly in Bulawayo, are nearing completion, and this project will deliver the city’s largest mall of its kind, featuring over 220 retail and food outlets, as well as office spaces.
“We expect these enhancements to significantly drive revenue growth in the properties segment through late 2025 and into 2026.
“The tenant mix will include a combination of smaller businesses, which generate higher rental yields, and key anchor tenants such as TM Pick n Pay and KFC,” he said.
In terms of operational review, the group’s supermarkets segment, trading as TM Pick n Pay, operated under significant strain due to regulatory pricing restrictions and constrained liquidity.
“Despite these headwinds, the segment maintained sound solvency and liquidity,” said Mr King.
He noted that during the year under review, three branches, Chegutu, Harare Street and Southwold, were closed while one branch, Hogerty Hill, was opened.
The segment’s revenue for the year declined by 2 percent to ZiG12,5 billion, while the number of units sold for the year grew by 1 percent.
“Units sold declined by 19 percent in the first quarter, increased by 24 percent in the second quarter, rose by 8 percent in the third quarter, and then decreased by 3 percent in the fourth quarter,” said Mr King.
He noted that revenue received in foreign currency during the year accounted for 23 percent of total revenue, up from 17 percent in the previous year.
“However, this revenue mix fell far short of the average mix of transactions conducted in foreign currency within the economy, creating challenges in trading terms with suppliers, and further compromising formal retail versus the informal sector,” said Mr King.
In the Hospitality segment, Mr King said the board resolved to dispose of the group’s remaining hospitality operation before the end of the reporting period.
Resultantly, the hospitality segment is presented under discontinued operations, with its assets and liabilities classified as held for sale.
Room occupancy for the year was 39 percent, up two percentage points from 37 percent in the previous year, while revenue per available room grew by 6 percent in US dollar terms.
The group’s properties division’s revenue from third-party tenants increased by 34 percent, reflecting the positive impact of the ongoing refurbishment of the properties.
Mr King said the group secured a loan facility from a local bank to expedite the refurbishment of its remaining properties and the projects were at an advanced stage as of year-end, with completion anticipated during the forthcoming year.
In the Security services, revenue from external customers grew by 10 percent, while profit after tax increased by 24 percent, benefiting from a reduction in net monetary adjustment that increased by 146 percent this year.
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