HomeBusinessOK to dispose of furniture division

OK to dispose of furniture division

Shakeman Mugari

OK Zimbabwe Ltd will soon dispose of its furniture division to concentrate on the retail business.

rif”>The company this week issued a cautionary statement indicating that it was engaged in talks regarding the sale of its non-core business.

At the company’s analysts’ briefing this week, OK said talks for the transaction were at an advanced stage.

“We are still negotiating a possible disposal of the non-core business. At the moment we cannot reveal the business we are going to sell,” said chief executive officer Willard Zireva.

“In the next few weeks the transaction might be complete. We also cannot reveal the amount or the business we are selling.”

Analysts however maintained that OK was weaning off the furniture division as it was the only non-core business.

Without disclosing the deal, Zireva said its disposal would improve the overall group performance.

“The transaction will leave us with the working capital for the group. The performance of the group will be enhanced by the proposed deal,” he said.

Some sections of the market are however, skeptical about the rationale of disposing the furniture division, arguing that for a re-tail company, furniture should be core to the business.

The retail group is also considering opening branches in neighbouring countries, a move that could give it a foreign currency hedge.

Zireva said the company was still searching for opportunities within the region.

The company could however not give details of the regional drive that is being mooted at management and board level.

OK said plans were afoot to open two more branches soon.

For the period to September 30 the retail company significantly beat market expectations with a basic earnings per share of 226 cents ahead of an average of 190 cents gathered from the seven broking firms surveyed.

Turnover increased to $80,1 billion up from $15 billion on the back of net sales that increased 439% during the same period last year.

Gross margins increased six-fold to notch $16,8 billion up from $2,4 billion achieved during the comparative period last year.

A final dividend of 115 cents per share was declared.

Inventories at the end of October were valued at $45 billion.

The group said volumes had decreased over the last year due to the cash shortage and shrinking disposable income among customers.

Zireva said the second quarter was likely to be better than the previous one.

“We are expecting a sales growth of more than 600% in the current quarter. In fact, the current quarter is the best period in terms of sales and business,” said Zireva.

OK shares yesterday traded at $25 each.

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