Meikles decries low disposable incomes impact on supermarkets segment – NewZimbabwe.com

By Alois Vinga

LISTED diversified group, Meikles Limited has bemoaned the impact of dwindling disposable incomes among the consuming public for choking the smooth flow of business in the supermarkets segment.

Presenting the group’s performance for the period ended February 28, 2023, Meikles Limited Group chairman, John Moxon said the group demonstrated resilience in responding to market challenges.

“Growth in sales units was achieved at the supermarket segment under tough operating conditions characterized by declining customer disposable income during the greater part of the period under review.

“Gross profit margin decreased by 2% to 23% from 25% in the previous year, partly reflecting the impact of the Supermarket segment’s strategic thrust on responsible pricing to support customers during the challenging times.

“In addition, the sales mix was dominated by grocery items that have low margins,” he said.

The working class in the country is currently at its lowest ebb in terms of earnings amid reports the majority are still earning way below the Poverty Datum Lines in part, contributing towards waning demand for basic commodities and services.

Market watchers also believe that the formal retail sector is lagging when it comes to pricing models, often charging exorbitantly when benchmarking against the official rates. In comparison, the informal market easily adapts and enjoys flexibility due to very limited government regulation on the sector.

During the period, the group revenue grew to ZWL 278.9 billion representing a 45% increase (60% on a like-for-like basis).

In historical cost terms, revenue grew by 356% (420% on a like-for-like basis) to ZWL 230.9 billion (Previous year: ZWL 50.7 billion).

Group net operating costs increased by 63% to ZWL 67.1 billion (Previous year: ZWL 41.3 billion). The Group reviewed employee remuneration regularly to cushion employees from the rising cost of living.

Consequently, employee costs increased by 64% and were 50% of total operating costs. In addition, the increases in costs denominated in foreign currency, as well as electricity and water, were ahead of revenue growth.

Profit after tax (excluding investment income of ZWL 3,6 billion and ZWL 179,0 million profit on the distribution of subsidiary equity to shareholders in the previous year) declined by 48% to ZWL 3,1 billion but in historical cost terms, profit after tax increased by 206% on a like for like basis.