Clothing in Zimbabwe - edgars.co.zw
Transcript of Clothing in Zimbabwe - edgars.co.zw
![Page 1: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/1.jpg)
![Page 2: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/2.jpg)
Clothing in Zimbabwe
Jacqueline Ngwenya CA(Z)
Group Financial Accountant
![Page 3: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/3.jpg)
Overview
• Clothing & Textile Manufacturers• The Background
• The Challenges
• The Prospects
• Clothing Retail• The Retail Environment
• The Prospects
• Edgars
• Questions?
![Page 4: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/4.jpg)
Clothing &Textile Manufacturers
![Page 5: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/5.jpg)
The Background
1920’s
•British Cotton Growers fund cotton growers
1948
•Export to SA; developed 3 ginners +cotton spinners
1980-9
•Rapid growth 50% in Textile Manf.+61% of Clothing Manf.
![Page 6: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/6.jpg)
The Background
1990’s
•Decline of clothing & textile manufacturers (106 shut)
2000-8
•Hyperinflation. Jobs down 27K since 1990’s peak @35K
To date
•Manufacturers struggle with quality & competitiveness
![Page 7: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/7.jpg)
The Challenges
Struggle to be competitive mainly because of:
• High cost of production: wages, utilities
• Low productivity
• Low quality output: old/obsolete equipment + shortage of skilled machinists (diaspora)
• Lack of fashionability
• Erratic power cuts
![Page 8: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/8.jpg)
The Challenges
Other challenges:
• Seasonal nature of business: fabric & otherinputs paid for in advance. Huge WC outlay
• Few local fabric suppliers
• All equipment imported
• Pressure for wages to increase (in SA frozen +proviso to pay lower)
![Page 9: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/9.jpg)
The Prospects
• SADC & COMESA
• Regional shift from imports: can beencouraged by good local production.Advantages:
• Smaller order quantities
• Quick replenishment (China 12-18weeks)
• No duty
• Opportunity to compete on niche products
![Page 10: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/10.jpg)
The Prospects
Require:
• A change in mindset: business & labour
• Investment in technology & machinery
• Investment in skills
In order to address key issues of:
• Quality & productivity
![Page 11: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/11.jpg)
Clothing Retail
Joina Centre
![Page 12: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/12.jpg)
The Retail Environment
In Zimbabwe it has evolved:
• From few large chains dominating TO manyplayers (boutiques + informal)
• From less competition TO highly competitive
• Local competition TO global competition(travel & internet exposure; imports)
At dollarisation price was the main issue.
Price important, but now also brand & quality
![Page 13: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/13.jpg)
The Retail Environment
• On the low-end: competing with informaltraders: low cost structure, avoid duty &taxes
• 40% duty + $3/kg (shoes $1 per pair)surcharge on imports + delays at border
• High utility costs (Electricity, Water, Rates)
• Pressure from landlords to increase rentals(want regional rentals)
• Unemployment
![Page 14: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/14.jpg)
Retail Environment
• Companies facing closure
• Stiff competition from bank loans & othercredit retailers
• Employers struggling to pay salaries: CityCouncil, NRZ
• No credit bureau (–ve reporting)
• Low liquidity, high borrowing rates (20%quoted)
![Page 15: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/15.jpg)
Formal Employment No’s
Source: John Robertson
7.8
7.9
8.08.1
8.1
8.4
7.5
7.6
7.7
7.8
7.9
8
8.1
8.2
8.3
8.4
8.5
780
800
820
840
860
880
900
920
940
960
2010 2011 2012F 2013F 2014F 2015F
Pe
rce
nta
ge o
f W
ork
forc
e
Form
ally
em
plo
yed
00
0's
Formally employed
Percentage of workforce
![Page 16: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/16.jpg)
Footwear - VillageProspects
![Page 17: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/17.jpg)
Prospects in Clothing Retail
• Whenever economic recovery clothing benefits soon after basic commodities
• Fashion constantly evolving – there will always be a market
• As we came out of hyperinflation much of cheap merchandise + no service + no QA
• We believe opportunity exists to provide quality merchandise+ pleasant experience
![Page 18: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/18.jpg)
Prospects in Clothing Retail
• Credit retail + good collections = volume growth for business
• As retailers grow local manufacturers who produce quality merchandise at a reasonable price will also benefit
![Page 19: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/19.jpg)
Joina Centre
![Page 20: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/20.jpg)
Edgars
• Founded Sydney Press
• 1st Byo Store 1946
• Listed 1974
• Factories: Carousel 1974, Jeans 1993
• Express stores launched 1984
• November 2011 Express to Jet
![Page 21: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/21.jpg)
Edgars Group Structure
![Page 22: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/22.jpg)
Vision
We aim to be Zimbabwe’s undisputed market leader in the
clothing and footwear retail business offering quality, value and
superior customer service in pleasant shopping environments.
![Page 23: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/23.jpg)
Re-building...
• At height of “lost decade” stopped offeringcredit (2008)
• Stores had become “soccer fields”
• Reduced from 87stores in 1992 to 34 (2009)
• Our working capital + local suppliersdecimated
• Economy “dollarised” in 2009
![Page 24: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/24.jpg)
Our Business Strategy
Market share
Product
ivity
Profitable growth
![Page 25: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/25.jpg)
Our Business Strategy• Our customers had been shopping abroad
and accustomed to SA standards and quality
• Market share:
A/c growth +
New stores +
competitive pricing +
improved standards +
quality assortments (incl. genuine qualitybrands)
![Page 26: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/26.jpg)
Our Business Strategy• Productivity:
Goal alignment
performance measurement
Cost management
• Cheaper funding with longer tenures
![Page 28: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/28.jpg)
….To here-2011
Retail sales of $51m 44%
Trading profit of $7,4m 77%
Earnings per share of 1.37cents 120%
Trade and other receivables $19,5m 23%
No. of debtors 158,901 43%
$12,8m improvement - CF from operations 115%
![Page 29: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/29.jpg)
Scope for a/c growth…
210.7223.4 227.1 231.9 234.6
214.7
38.8
111.2
158.9
0
50
100
150
200
250
2002 2003 2004 2005 2006 2007 2009 2010 2011
![Page 30: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/30.jpg)
2012 Targets @ a Glance
• Turnover of $57m (12%)
• Finance costs <4% of turnover
• PAT $4.0m (21%)
![Page 31: Clothing in Zimbabwe - edgars.co.zw](https://reader031.fdocuments.us/reader031/viewer/2022020623/61f24387b8425815043bc511/html5/thumbnails/31.jpg)
Questions?
www.edgars.co.zw