Retail giant, OK Zimbabwe Limited encountered substantial supply disruptions in the second half (H2) of the just ended 2022 financial year to March due to delays by the Reserve Bank of Zimbabwe (RBZ) to settle winning bids from the foreign currency auction.
Despite providing some semblance of stability to the foreign exchange market in the first half of the year, the second half was however characterized by a significant cash shortages creating a massive backlog in settlement of foreign currency to local companies.
Commenting on the FY-22 financial results, group chief executive officer, Maxen Karombo said the retailer struggled to access some key product lines as a result of lack of adequate foreign currency supply.
“The Group’s stores were adequately stocked for much of the financial year, although the delays in the settlement of foreign currency on the RBZ auction system, among other operating challenges, impacted the operations of our suppliers resulting in erratic supply of some key lines,” he said.
There was a marked volatility in the availability of foreign currency on official platforms which resulted in a widening dichotomy between the rates offered on the RBZ auction system and alternative sources of foreign currency.
Most market players had to rely on alternative sources of foreign currency which fed into product pricing.
“The spike in the month-on-month inflation rates during the course of the last quarter of the financial year was evidently hinged on the cost of foreign currency on alternative markets. The scarcity of foreign currency resulted in the growth of the informal sector where suppliers readily access foreign currency cash in an unregulated market format,” said Karombo.
Earlier in the year, the RBZ vowed to clear the backlog by May, a promise it is yet to fulfill.
Yesterday, the Central Bank Governor Dr John Mangudya speaking at the Zimbabwe Institute for Strategic Thinking (ZIST) said there have been missteps along the way which has since been corrected on the smooth operations of the auction and the backlog will soon be cleared.
Despite these challengers, the group was resilient enough to grow its sales volumes for the year by 22.7 percent ahead of prior year.
This translated into revenue growth of 34.7 percent to ZW$ 79.9 billion in inflation-adjusted terms from ZW$ 59.3 billion in the prior year. Profit before tax of ZW$ 4.8 billion was 38.5 percent above prior year’s ZW$ 3.5 billion.
Subsequently, the group posted a profit after tax of ZW$ 2.8 billion from ZWL 1.9 billion in precious year.
The Group continued with its store refurbishment program with makeovers completed at OK Masvingo, OK Queensdale, Bon Marché Avondale, OK Mbare and OK Chinhoyi. The Group opened two new stores during the year, OK Banket and OKmart Chivhu.