eBusiness Weekly
Enacy Mapakame
The country’s biggest retail group OK Zimbabwe’s sales volumes for the half year to September 30, 2019 went down 23 percent compared to same period last year on the back of the obtaining challenging economic environment.
During the period under review, the country has experienced severe economic headwinds that had a knock-on effect on businesses across sectors.
Erratic power supplies that escalated this year, disruptions in production time, deterioration of the exchange rate and the resultant hike in prices posed challenges for the business as the market experienced dwindling disposable incomes.
Government also implemented several currency reforms such as the re-introduction of local currency and abolishment of the multi-currency system for local transaction and settlements which resulted in a depreciation of local currency and an increase in prices of goods and services.
For the retail giant, foreign currency shortages resulted in a slowdown in the importation of merchandise while power blackouts that are being experienced across the country affect operations such as in-store bakeries.
The erratic power shortages are also feared to be increasing overheads for businesses and operating costs.
Management, however, remains upbeat of maintaining good stocks especially for the festive season when demand for goods generally spikes.
“Despite the difficult conditions, the company’s stores remain reasonably stocked for the upcoming festive season and beyond.
“While price increases have been frequent because of the instability in the market, the company will continue its efforts to deliver the best possible value for its customers,” said OK in a trading update.
Market watchers contend the foreign currency shortages and the increase in procurement costs will increase pressure on margins.
Meanwhile, the retail giant has announced delays in publication of interim results. The Public Accountants and Auditors Board of Zimbabwe (PAAB) on October 11, 2019 requires that all Zimbabwean entities with reporting periods ending on or after July 1, 2019 are required to apply hyperinflationary accounting.
In terms of the requirements of the International Accounting Standard 29 (“IAS 29”), “Financial Reporting in Hyperinflationary Economies”, all entities reporting in the same hyperinflationary operating environment are encouraged to apply similar indices to produce the inflation adjusted financial statements.
By close of trade on Wednesday on the Zimbabwe Stock Exchange, OK was pegged at 78 cents.
