Continued value loss in bond notes turns Zimbabweans into fashionistas

 

By Tawanda Karombo

Zimbabweans have become fashionistas, frequently changing their wardrobes and opening accounts with trendy apparel outlets such as Topics, Truworths and Edgars but some of these clothing credit retailers are bleeding as they are hesitant to raises prices.
Other credit outlets such as TV Sales and Home have also been doing well, raking in the profits and Edgars Zimbabwe says there is resurgent consumer spending. Analysts say Zimbabweans are running for the covers, clearing their bank balances of bond notes in anticipation of continued value loss as they are unable to get their money out of banks.
“We anticipate cash sales at both Edgars and Jet will continue to rise as customers extinguish their RTGS (electronic bank bank balances) balances in anticipation of an inflationary environment,” analysts at IH Securities said in an update note on the company.
Executives from Edgars Zimbabwe and Truworths Zimbabwe have confirmed that account numbers and sales volumes are tanking up. Old Mutual and Truworths International are some of the biggest shareholders in Truworths Zimbabwe.
Edcon’s unit in Zimbabwe said last month that despite cash and foreign currency shortages, there is “resurgent consumer spending” which had had helped it to a seven percent revenue surge to $24.7 million for the half year period to July 9.

Resurgent consumer spending

At Truworths Zimbabwe – which runs Topics, Truworths Man and Truworths Ladies as well as Number 1 stores – the number of accounts increased by 4.1 percent to 88982 in the year to July 9 2017.
Truworths Zimbabwe chief executive officer, Bekhithemba Ndebele said on Thursday that although merchandise sales volumes for the year to July 9 had lowered by 28.8 percent, the company was sitting pretty with no US$ obligations on its books.
This is despite the fact that it is mainly an import business as it has to import most of its apparel either in fabrics for local manufacturing or in complete apparel units.
This is despite the fact that it is mainly an import business as it has to import most of its apparel either in fabrics for local manufacturing or in complete apparel units.
Merchandise sales for the period amounted to $12.2 million. This translated to a comprehensive loss position for the full year period of $$1.7 million. There has also been a marginal increase in the number of account holders who are able to make purchases from 65.7 percent in 2016 to 66.9 percent this year.
“For all the imports that have come in we have raised the cash up-front and there is no US $ obligation on the book. For the month of Sept we broke even after 3 weeks sales and on apparel we haven’t increased prices,” Ndebele said.
For Truworths Zimbabwe, price increases have been on perfumes “because they come in on a monthly basis” and the company says if it raises prices for apparel and footwear, its “volumes will suffer” losses. – Independent Media

 

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