Booming furniture sales fail to arrest decline in volumes

Furniture retail group Pelhams had mixed fortunes during the year ended March. It had a buoyant first quarter, followed by a subdued second quarter, a big spend third quarter which saw volumes grow by 50 percent compared to the same period the previous year, and a lacklustre last quarter in which hyperinflation reached unprecedented levels.

The result, it says, was a 15 percent decline in volumes. But in monetary terms sales increased by 165 percent, from $2.3 billion to $6.2 billion, beating average inflation for the period of 160 percent. Operating income trebled from $1.1 billion to $3.3 billion with net profit increasing from $809.7 million to $2.3 billion.

The company says though hyperinflation usually spurs people to turn any available income into assets that hold or increase value, the increased business was not enough to arrest the general decline in volumes.

The company was also not able to countenance the decline in volumes by opening new stores in strategic locations. It had only opened one new store in Gwanda. But it says the shareholding structure of the company enables it to pursue regional opportunities to recoup lost volumes and grow. This will also enable the company to get back some foreign currency earnings following the disposal of non-core export oriented Acorn Furniture Manufacturing.

The company had major shareholding changes during the year. Following the exit of Delta, South African Breweries had a direct interest in the company with Profurn, also a South African based company, being the largest and controlling shareholder. Management bought Delta shareholding, but when Profurn was taken over by the JD group in South Africa, management sold part of its interest to a consortium of indigenous shareholders.

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