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Edgars Stores ups interest rates


Edgars Stores Limited says it is in the process of increasing interest rates charged on customer accounts due to inflation and increased cost of borrowing.

In a trading update at the company’s annual general meeting, managing director, Linda Masterson said its total borrowings increased to $9,8 million in the period to May 2019 from $3,5 million last year and the group plans to borrow more during the year.

“$5,9 million is payable within 12 months and the balance is payable over the next three years. We plan to borrow more to fund capex requirements, growth in the microfinance unit and working capital, which has been under pressure due to inflation,” Masterson said.

The group’s trade and other liabilities increased by 112% to $15 million from last year whilst foreign liabilities went down from US$2,8 million to US$2 000 this year.

Included in the liabilities is an accrual of $2,3 million franchise fees which is part of the company’s legacy debts.

Edgars’ profit after tax increased from $1,8 million in 2018 to $8,7 million in 2019 whilst earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 524% to $16,3 million.

Turnover was up 90% but unit sales decreased by 16% with recent improvements for the Jet chain and Edgars.

“Jet chain had positive unit growth for April of 6% and May 10% while Edgars posted a 6% unit growth in May. June turnover was trending above 200% over the prior year until the announcement SI 142 after which growth slowed down to around 100%,” Masterson said.

She said the chain’s unit sales dropped by 16% whilst retail sales as at end of May, 2019 trading were 90% above last year against inflation of 97%.

The company’s finance income increased to $3,4 million from $2,8 million and its debtors book has been clean since the dollarisation.

The retail business posted an operating profit of $14 million up from $3,8 million last year and a 365% growth in EBITDA which stood at $14 million due to continued focus on cost control by the management team and cost inflation trailing behind top line inflation.

Edgars factory recorded a year to date trading profit increase of 41% to $1,5 million whilst the unit growth grew by 12% and 6% of sales were exports as the company continues to focus on export growth.

Masterson said the club plus loan book grew to $5,5 million from $2,2 million last year with non-performing loans (NPL) at 6,1% at the end of May, 2019, whilst the year to date trading profit stood at $0,5 million up from a loss of $29 000.

“We reopened our Jet Kadoma store in April and the sales in the store indicate that our customers have been eagerly awaiting our return in Kadoma town. The search for a suitable site for the Edgars store in Kadoma is ongoing. Other revamps and new stores planned for this year, funds permitting are Edgars Masvingo, Jet Masvingo and 2 to 3 new Jet stores,” Masterson said.

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