The company cited a drop in revenue and escalating operational costs as the primary reasons behind its earnings deficit.
The firm disclosed a basic earnings loss per share of 268 cents (ZWL) for the 26-week period ending on July 9, 2023, marking a tough period for the iconic retail brand.
In historical cost terms, Edgars Stores Group saw its revenue plummet to $39 billion, reflecting a stark 22.43 percent decrease from the $51 billion achieved in the previous year, 2022.
The sharp decline in revenue acted as a catalyst for the company’s prevailing financial challenges.
While the cost of sales did experience a decrease, dropping from $9 billion to $7 billion, it was more than offset by a staggering increase in other operating expenses, which surged to $22.5 billion from $7.2 billion.
This surge in operational costs, combined with the decline in revenue, placed a significant strain on the company’s financial health.
The pre-tax profit of $4 billion was a substantial drop, illustrating a 70 percent decrease compared to the same period in the previous year when the figure reached $14 billion.
The severity of these financial difficulties became even more evident as tax expenses of $5.7 billion were accounted for, resulting in an overall loss of $1.5 billion.
The company’s challenges extended to a decrease in sales volume.
Edgars Stores Group reported a 14.8 percent reduction in total units sold, declining from 1.28 million to 1.09 million units, in comparison to the corresponding period in the previous year.
Notably, among the company’s brands, the Edgars Chain experienced the most significant decline in units sold, with a 17 percent drop, reducing the number from 532,000 to 443,000 units.
The Jet Chain also faced a decrease in total units sold for the period, witnessing a 4.1 percent reduction, down to 583,700 from 608,900 units.
Conversely, Edgars Stores’ financial services division displayed growth amidst the challenging financial landscape.
The gross retail debtors’ book closed the period at $45.1 billion, marking an 83 percent growth compared to the prior year’s $24.7 billion.
This growth was attributed to the introduction of the USD book and strategic efforts focused on its expansion.
The real USD book closed at US$8.3 million, with active accounts growing to 73,600, thanks to new account drives and account conversion initiatives.
In contrast, Edgars Stores’ manufacturing unit, Carousel Manufacturing, faced negative performance indicators, with total units sold dropping by 1.4 percent to 67,900 units compared to 68,900 in the previous year.
Edgars Stores Limited is currently confronted with a challenging financial environment characterized by reduced sales, increasing operational costs, and a substantial earnings loss for the first half of 2023.
To overcome these difficulties and position the company favorably, management will need to strategize and implement effective measures.