File image. Photo: Reuters
Harare - Edgars' Zimbabwe unit says it may have to turn to South African parent Edcon for merchandising support as it loses market share to informal traders who are importing second-hand clothing illegally.

Edgars Zimbabwe MD Linda Masterson said on Wednesday that the trade in second-hand clothing had made it difficult for the company to operate.

“We have our loyal customers, but the informal traders are affecting the business,” Masterson said.

The unit said it had noted a “depressed consumer demand for clothing”, which was exacerbated by “stock-movement challenges”.

The company would not declare a dividend for the financial year.

Last year, Edcon dispensed guarantees to the value of $7.2 million (R90.4 million) - in interest-bearing loans and borrowings - to its Zimbabwean unit after it incurred a loss of $300 000 for the half-year to July 9.

Product range

Masterson said the company would increase its “product range to include school uniforms” and other apparel.

She said, although more emphasis would be placed on local brands, the unit would still look to Edcon for merchandising support.

The unit said after-tax profits in the 12 months to January declined to $500 000 from $3.9 million. Revenue fell to $52 million from $64 million in 2015.

The Jet chain, however, performed well, benefiting from customers buying down to cheaper alternatives.

Read also: Edcon debt is reduced to R7bn

Debtors amounted to $18.7 million for the year to January 8, from $28 million in 2015 after an allowance of $1.8 million for credit losses and net write-offs of about 7.9 percent.

“Jet-chain debtors were $4.4 million ($4.9 million in 2015),” Edgars Zimbabwe chairman Them- binkosi Sibanda said.

Jet’s total sales declined to $17.7 million from $19.1 million in 2015.

The group incurred loan repayments of $6.8 million during the period, reducing borrowings to $11.2 million, compared with $18 million in the previous year.

The company said retrenchments in Zimbabwe affected its ability to generate revenue, while the costs that Edgars itself incurred to retrench staff also weighed heavily on its year-end profits.

The apparel-manufacturing unit run by Edgars Zimbabwe made a trading loss of $400 000, which the company attributed to “reduced demand from group retail” operations.

The company said production at the manufacturing operation was affected by the “limited allocation of foreign currency” to manufacturing and industrial companies in Zimbabwe.