Retail giant OK Zimbabwe’s revenue for the financial year 2019 to jump 11 percent to $651 million, according to industry analysts, driven by an anticipated robust performance in the primary sectors that drive consumer market and use of plastic money.
In the financial year 2018, OK’s revenue jumped 23 percent to $582 million on the substantial migration of transactions from cash dependent informal sector to formal sector where use of plastic money has become the order of the day.
For OK, point of sale (POS) transactions constituted 82 percent of total transactions.
Market watchers are of the view the current momentum in the economy will remain in the near future especially the use of plastic money, which will have an impact on OK’s performance.
“Overall, we anticipate the current momentum at OK Zimbabwe to continue in FY19. We forecast revenue will end the year at $650,91 million (+11,7 percent year on year),” said Harare brokerage firm IH Securities.
A strong performance in 2019 is also anticipated on the back of loyalty based promotions that have remained key across the retail sector.
This is expected to remain firm as small scale farmers and small scale miners record gains which in turn improve disposable incomes.
“The bottom of the pyramid, which is highly dependent on the primary sector, remains highly liquid with the number of tobacco growers reaching a record high, amongst a 3,3 percent improvement in average tobacco prices from the previous year.
“The robust performance in primary sectors will continuously aid the group’s performance as disposable incomes and average spend will be expanded. We also expect the government’s 15 percent salary rise for civil servants to give a rise to performance,” said IH.
Profit before tax, net income and basic earnings per share are seen maintaining prior year levels in the financial year 2019.
Its share price on the Zimbabwe Stock Exchange is also seen climbing 17 percent to 25,7 cents.
Zimbabwe’s retail sector remains highly competitive and promotions have been one of the methods used to attract consumers.
The country’s leading retailers in competition with OK, TM Pick n Pay, Spar, Choppies as well as wholesalers such as Metro Peech, Mahomed Mussa, Gain Cash and Carry and N Richards have had promotions to lure the market.
Management at Ok has indicated the group will focus on improving its market share through efficient use of existing capacity, cost containment and enhancing profitability.
The group will also source its stock through third parties as there is need for import permits on certain products. Its partnership with Kawena has been crucial in providing foreign currency to get raw materials on behalf of some of the group’s suppliers.
The stockbrokers have maintained a “hold” recommendation for OK Zimbabwe, which has a total stores compliment of 62 stores across the country.
Chief Executive Officer:
OK Stores: 48
Bon Marche`: 8
OK Mart: 6
Total stores: 62
Staff Numbers: 4 337