HARARE: OK Zimbabwe Limited says net sales for the quarter ending June 30 were lower than budgeted and declined against the previous year by 7,5% due to the deteriorating macro-economic environment that spawned declining consumption and falling prices.
Speaking at their annual general meeting last week, chief executive officer Willard Zireva said that even though the OK Grand Challenge Jackpot Promotion was a success, “sales generation on either side of it was poor leading to overall subdued performance for the quarter to June 2015”.
He said margins were under pressure as retailers competed for sales while consumers searched for low prices.
“Recognising the reality of the economic downturn with the resultant negative impact on revenue generation, measures to reduce overheads have been intensified and controls over shrinkage enhanced to ensure that the business remains profitable,” Zireva said.
Zireva said the company would rationalise its capital expenditure programme given the subdued business performance.
Efforts to stimulate sales would continue and include expanding the OKmart wholesale operations to locations “where the brand is not represented as well as converting some conventional stores to newly OK value brand” to capture more customers at the value end of the market, Zireva said.
In the year ended March 31, OK saw its profit declining to $7,5 million from $9,6 million in the previous year. Total revenue for the company was $462,7 million from $483,6 million in the previous year.
Headline earnings which are a measurement of a company’s earnings based solely on operational and capital investment activities, was at $7,53 million for the year down from the $9,69 million over the same period in 2014.
The above earnings specifically exclude any income that may relate to staff reductions, sales of assets, or accounting write-downs in any business.
