Edgars Stores, one of the largest clothing retail chains that has been thriving on credit sales, is to reduce its credit window to three months by mid-year. It says this is to reduce growth in its debtors’ book and protect its real worth.
In its report for the year ending 3 January 2004, the company says its gross sales increased from $14.9 billion to $83.7 billion. This was despite an acute shortage of cash for most of the year before the introduction of bearer’s cheques.
Rampant inflation which rose to 599 percent by the end of the year grossly eroded disposable incomes while the depreciating currency forced prices up.
The company was also affected by a strike which crippled its major centres towards the end of the year. Sales still grew by 452 percent ahead of inflation which averaged 432 percent.
The Edgars chain grew by 462 percent. The company says this could have been higher had it not been for understocking in the first quarter.
Express was affected by the shortage of cash and inadequate stocks at the beginning of the year. It grew by 427 percent.
Manufacturing had a better year with sales increasing by 507 percent. All three factories had full order books.
Operating profit increased from $4.8 billion to $38.2 billion while net profit shot up from $3 billion to $21.6 billion.
The company says performance for 2004 is likely to be constrained by lower wage and salary awards as employers grapple with higher interest rates and reduced margins and leaner stockholdings necessitated by the need to reduce borrowings because of higher interest rates.
Prices are also likely to be smothered by reduced demand and price cuts to motivate unit sales.