Edgars debt soars

HARARE - Edgars is currently seriously in debt, mortgaging 42,4% of its balance sheet by short-term borrowings of $132 bn.
Given the high finance costs of around 550-600% in the market currently, that is a serious threat to both short and long-term profitability.
The clothing retail group,

which is considering closing about 10 of its branches countrywide, incurred finance costs amounting to $62 bn for the period ending June 30.
Edgars recorded a $245, 5 bn turnover, an increase of 9 510%. However, unit sales fell by 26% during the same period.
The Edgars chain grew by 8 798% while Express inclusive of Expressmart
increased sales by 9 595%.
Unit sales in Edgars fell by 35% whereas units sold in Express including Expressmart fell by 13%. Earnings for the period rose by 68 165 to $74,5 bn.
Interest played a significant part on profitability and the financing expense of $61,9bn was 12 756% higher than the same period last year. The interest paid was covered 1,9 times by trading profit.
The group commenced 2007 with cash balances of $2,1 bn and inventories of $3,1bn. This opening stock was way below ideal and the situation was worsened by the sluggish and erratic deliveries from suppliers in the first 2½ months. – CAJ News

Post published in: Economy

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