Covid-19 takes toll on listed firms

Source: Covid-19 takes toll on listed firms | Sunday Mail (Business)

Enacy Mapakame Business Reporter
Listed retail and consumer oriented stocks are among the worst affected by Covid-19 with figures showing  depressed sales volumes during the lockdown period.

Figures from OK Zimbabwe, Delta, Edgars and National Tyre Services (NTS), all show the negative effects of the lockdown on businesses.

The country implemented a national lockdown effective March 30, 2020 as part of efforts to limit the spread of the pandemic. This saw several businesses close shop as they were not essential services.

But retail groups such as OK Zimbabwe and others that sell groceries and food, were allowed to operate albeit at reduced trading hours.

For Edgars, its stores closed for the month of April due to the lockdown. As a result, total units sold for the period to June fell 40 percent to 963 000 compared to 1,6 million recorded during the same period last year.

At Edgars chain, unit sales went down 55,7 percent to 273 193 while unit sales at Jet chain were down 46 percent for the period to date against 2019.

Indications from the clothing retail group are that although lockdown regulations were relaxed, sales are still depressed due to shortened trading hours.

“Sales were trending upwards since lockdown relaxation, but have now been hampered by shortened trading hours enacted by Government in July, as customers are unable to access outlets on time,” said chief executive officer Tjeludo Ndlovu in a trading update for the second quarter to July 5, 2020.

The group’s financial services unit was negatively affected.

Said Ms Ndlovu: “The quality of the book was badly affected during March and April due to lockdown resulting in increased expected loss provision for the quarter.”

For beverages giant, Delta, limited access to markets resulted in beer volumes taking a dip as distribution channels like bottle stores, clubs, beer halls and other social gatherings that drive beer sales remained closed. In South Africa, beer sales were completely banned although this was later reviewed.

Premium tyre management solutions provider, NTS, has not been spared as the firm indicated overall sales volumes went down by 49 percent for the first quarter to June 30, 2020 when compared to same period last year as trading was suspended following the announcement of nationwide lockdown.

“The adverse effects of the Covid-19 pandemic on the business environment continued during the quarter under review and became the single largest contributor to depressed performance.

“The disruptions caused by the complete shutdown in April and the reduction in trading hours in the subsequent months meant that volumes were lost,” said NTS in a trading update for the quarter.

Although food outlets and groceries stores were listed among essential services, movement restrictions have remained a challenge for the market to access outlets.

As a result, there has been a significant decline in sales volumes.

At OK Zimbabwe, sales volumes for the quarter to June 30, 2020 went down 32 percent compared to same quarter in the prior year on reduced trading hours as the quarter commenced at the beginning of the national lockdown.

Diversified hospitality group, Meikles Limited’s supermarket division trading as TM Pick n Pay had already seen a 22 percent decline in sales volume for the year to March 31, 2020 on diminishing consumer spending.

The operating environment remains uncertain due to the pandemic and market watchers say businesses ought to be innovative to remain sustainable in this “new normal”.