OKZim: Maintaining Revenues, Expanding into the future

Home/Investor Alert/OKZim: Maintaining Revenues, Expanding into the future

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  • Expanding into the future: The group’s expansion drive has been viewed as a mismatch with the prevailing economic environment. We are, however, supportive of the strategy as we believe it will allow the Group to preempt the impact from competitors such as Pick n Pay and Choppies. We also believe, the ongoing expansions into new areas, as well as refurbishments, will help enhance brand strength and improve sales growth. This strategy should, however, be done in a way that does not erode shareholder value. We believe any investments that are made must be backed by optimal returns in the medium to long term.

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  • Stress points remain: The Zimbabwean consumer has been constrained by combined effects of persistent liquidity constraints, very low FDIs and low prices of exported commodities.

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  • Top line growth marginal: FY14 growth rates are below the growth rates enjoyed by the retailer since dollarization.

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  • Profitability margins coming off: The drop in profitability is as a result of operating costs increasing at a rate higher than sales growth.

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  • Strategy going forward: With disposable incomes continuing to come off, management is putting more effort into growing its revenue base. Strategies that have been put in place include, but are not limited to, increasing store network, improving service and quality offering, as well as expanding into new growth areas such as financial service provision.

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By |July 25th, 2014|Categories: Investor Alert|

About the Author:

Kudzanai Sharara
Kudzanai’s background in financial journalism with ZFN, combined with a continuing education in financial management, provide a solid grounding for his work in the research department.