We have extracted the financial summary from the third quarter interim report of OK Zimbabwe Limited, listed on the Zimbabwe Stock Exchange under the share code OKZ, is leading retail group in Zimbabwe trading under various branded store names, including OK stores, Bon Marché and OKMart. The company sells products ranging from groceries and houseware products to clothing and textile.
While the first half was relatively stable, the operating environment became more challenging in the second half of the financial year. The fiscal and monetary policy pronouncements in October 2018 affected confidence in the market among holders of ZWL balances and bond notes and triggered panic buying of goods to retain value as well as provide against expected shortages. Shortages of foreign currency constrained replenishment and led to high prices of products. Official year on year inflation increased from 2.68% in March 2018 and 5.39% in September to 66.8% by March 2019. Despite the increasingly harsh operating environment, the Group recorded an improved performance in both sales growth and profitability compared to prior year. The growth in sales and increase in profitability are attributable mainly to successful and robust promotions, refurbished branches, continued customer focus, and the lag of cost increases behind revenue growth in inflationary conditions During the year, the Group opened a new OK branch in Glen View and an OKmart store in Masvingo, to date their contribution to the Group is pleasing. The refurbishment programme continued during the year, with OK Marondera, Bon Marche’ Chisipite, Bon Marche’ Borrowdale and OKmart Harare being refurbished. The emphasis was to increase capacity and facilities and improve customer experience.
Revenue for the year increased by 37.6% to ZWL 801.9 million, from ZWL 582.9 million in the prior year. Profit before tax of ZWL 67.5 million was 186.1% up on prior year’s ZWL 23.6 million, while profit after tax increased by 156.9% to ZWL 49.2 million from ZWL 16.6 million in prior year. Overheads growth was restricted to 3) 4% which is below the revenue growth of 37.6%. Increases were attributable to, among others, staff costs, maintenance costs and spares, bank charges and rentals. The cost lines that increased significantly were those linked directly with revenue generated. The Group operated free of debt as internally generated funds were adequate for working capital and capital expenditure requirements. Capital expenditure for the year was ZWL 25.8 million, up from ZWL 15.5 million in prior year as the Group continued with its refurbishment exercise to improve existing facilities as well as expand its footprint.
Product supply remains a challenge and strategic linkages with suppliers will be key to ensure the stores are reasonably stocked. Despite the economic challenges in the country the Group will continue to focus on growing market share profitably through continuously enhancing the customer value proposition. Refurbishment work will be carried out on a number of stores and new stores will be opened as strategic sites are identified where the Group is presently inadequately represented.