Zimbabwean retailer OK reports 33% decline in half year profit impacted by COVID-19

ZIMBABWE – Listed supermarket chain, OK Zimbabwe Limited’s profit slumped 33% to ZWL$999.5m (US$2.7m) in the six months to September 30,2020 from ZWL$1.5bn (US$4.14m) reported in the prior comparative period after revenues for the group were hammered by the Covid-19 pandemic.

Its revenue fell 15.5% to ZWL$11.6bn (US$32m) during the reviewed period from ZWL$13.8bn (US$38.13m) recorded in the same period last year, reports Business Times.

The group said its response to fight Covid-19 pandemic impacted overheads coupled with its contingent rentals, repairs and maintenance, bank charges and cleaning expenses also.

“The containment measures affected business through limited production, supply chain disruptions, logistical bottlenecks and reduced aggregate demand.”

OK Zimbabwe board Chairman – Herbert Nkala

In addition, the deadly virus dealt a hammer blow to OK Zimbabwe’s sales volumes, which plunged 26.9% compared to the same period in 2019 due to declining aggregate demand.

Covid-19 was declared a pandemic and the country went into lockdown from 30 March 2020. The lockdown restrictions remained in place at different levels throughout the period under review.

“The containment measures affected business through limited production, supply chain disruptions, logistical bottlenecks and reduced aggregate demand,” said OK Zimbabwe board chairman, Herbert Nkala.

He however, credited the auction system, which was introduced in June this year replacing the interbank rate, saying it allowed the company to meet all its forex needs during the period under review.

“Between allocations from the auction and the foreign currency sales generated in the business, the group was able to pay for all its import requirements,” Nkala said.

Its Capital expenditure for the half year amounted to ZWL$384.9m (US$1.06m), from ZWL$51.5m (US$142,000) recorded in the prior comparative period.

Most of the capital expenditure was on store refurbishments and equipping new stores across all its three brands, namely OK, Bon Marche’ and OK mart.

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During the period they completed refurbishments at OK Avonlea and OK Machipisa, to which customers responded positively, leading to improved sales.

Post the reporting period, the group opened a new OKmart store in Victoria Falls on October 1, 2020 and an OK Store in Harare’s Sanganayi Inn area on November 5 2020.

According to Nkala the refurbishment programme will continue, and eight stores have been targeted for completion by the end of the financial year.

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