Consumer spending was suppressed, and continues to slow down, due to depressed salaries purchasing power. The business recorded negative unit growth, with only April and May performing positively in unit terms. In June, positive performance was again negatively affected by the introduction of mono currency. Cumulatively, units for the first half declined by 17%. Turnover increased by 96%, from $32.1m to $62.9m.
Group inventory increased by 123% in value, however, in unit terms the chains were holding less stock than last year. Profit after tax for the period was $13.6m, a 594% increase from $1.9 million in the same period last year. The business benefited from a leaner structure, cost inflation that was trailing top line inflation and pre-emptive stocking arrangements. Other gains and losses include exchange gains of $2.7m (2018: $60k loss).
The chain recorded turnover of $37.6m (2018: $19.5m) out of 25 stores (2018:26) an increase of 93%. Units sold for the year were 0.6m (2018: 0.8m), a decrease of 25%. The chain’s profit to sales ratio increased to 36.8% from 23% in 2018.
Total Sales were $23m (2018: $12m) out of 25 stores (2018:25) an increase of 91%. Units sold for the year were 0.87m (2018: 1.048m), a decrease of 17%. The chain’s profit to sales ratio increased to 30% (2018:16.7%). Jet Kadoma was reopened in April 2019.
The quality of the Group’s debtors book is good with 4.3% of the book over 30 day due and 80.2% being current as at end of June 2019. Total active accounts as at the end of June 2019 were 147 631 (2018: 152 422).
Edgars Chain debtors were $26.1m (2018: $16.8m) after an allowance for credit losses of $0.8m (2018: $0.9m). Bad debt written off net of recoveries for the period averaged 0.8% (2018: 1.8%) of lagged credit sales, and 0.1 % of lagged debtors (2018: 0.1%). Edgars chain active accounts as at June 2019 were 96 012 (2018: 100 159).
Jet Chain debtors were at $7.9m (2018: $4.9m) after an allowance for credit losses of $0.6m (2018: $0.5m). Bad debt written off net of recoveries for the period equated to 1.1% (2018: 1.4%) of lagged credit sales, and 0.2% of lagged debtors (2018: 0.5%). Jet Chain active accounts as at June 2019 were 51 619 (2018: 51 383).
The factory made a profit of $1.9m (2018: $0.3m loss). 6% of sales were exports.
The microfinance business revenue increased from $0.5m to $1.8m, making a profit before tax of $1m (2018: $60k). Loans to customers were at $5.9m (2018: $4.3m).
Financing and Cashflow
Gearing was at 0.27 (2018: 0.19). The Group had USD200k foreign liabilities as at the end of June 2019.
The prevailing liquidity challenges impacts negatively on our stocking and growth initiatives while decimated consumer salaries continue to supress demand. We remain committed to providing compelling ranges to our customers at competitive prices and convenient locations.
We plan to open two new Jet stores in Banket and Chegutu as well as re-opening the Edgars Kadoma store before the end of the year. With the investment in merchandise and increased trading space, management is confident that they will deliver profit growth in the second half.
Your Company will not declare an interim dividend as at 7 July 2019 as a result of the tight liquidity in the market and the need to finance growth.
I am grateful to Board colleagues, management and staff for their dedication and also to our customers for their loyalty as well as our landlords, bankers and suppliers for their continued support.
T N SIBANDA