OK Zimbabwe said profit for the year to March 31, 2021 halved to $1 billion from $2 billion recorded in the prior year due Covid-19 pandemic which severely eroded household spending after the Government imposed restrictions to limit the spread of the disease.
Group chairman Mr Herbert Nkala noted the pandemic affected the business as the country was plunged into various levels of lockdowns, resulting in reduced trading hours.
“The operating environment for the financial year under review was affected by Covid-19, with lockdown restrictions in place throughout the period.
“The lockdown measures negatively impacted business through supply chain disruptions and reduced consumer disposable incomes,” he said in a statement accompanying financial results.
During the year under review, the Group was also unable to hold its flagship promotion, the Grand Challenge and as a result, volumes for the year declined by 13 percent from prior year.
Revenue for the year fell 2 percent to $34,3 billion from $35 billion in the prior year.
At $2 billion, profit before tax was 42 percent below prior year’s $3,4 billion. Attributable earnings per share halved to 86,45 cents from 163,29 cents a share.
Total assets rose to $12,5 billion from $9,9 billion in the comparable year. Overheads grew by 6 percent over prior year as measures implemented by the Group to curtail the spread of Covid-19 increased the cost base.
Electricity charges, staff costs, cleaning costs and security expenses also contributed to overheads growth.
Capital expenditure for the year was $1,2 billion down from $1,5 billion in prior year.
Said Mr Nkala: “Most of the capital expenditure was on store refurbishments and equipping the new stores.”
The Group completed refurbishments at OK Avonlea, OK Machipisa, Bon Marché Belgravia, Bon Marché Eastlea, OK Kadoma, OK Rusape and OK Hwange.
Two following new stores were opened — an OK store in Harare’s Sanganayi Inn area and an OKmart store in Victoria Falls.
The Group also embarked on a brand repositioning exercise for all its store brands, namely OK, Bon Marché and OKmart to meet emerging customer requirements and market trends. During the year, the auction system however, brought exchange rate stability as well as improved access to foreign currency.
This, together with the liberalisation on the use of foreign currency for domestic sales under Statutory Instrument 185 of 2020 brought some stability into pricing and product supply.
While the impact of Covid-19 on future operations remains uncertain, the Group’s financial status however, remains solid and has put in place mitigatory measures to ensure continuity and viability of operations.
Mr Nkala added the Group was also positioned to maximise on the anticipated economic rebound on the back of improved agricultural season.
The resumption of the Grand Challenge promotion in the current financial year is also expected to underpin volume growth in the first quarter.
“The Group will also continue to pursue more innovative initiatives to grow market share profitably. The refurbishment and expansion drive will be reinforced, with a number of stores targeted for refurbishment and potential new sites under consideration,” he said.
OK declared a final dividend of 54 cents per share which brings the total dividend declared for the year to 80 cents per share.