30 November 2012

Zimbabwe: Pelhams Records U.S.$508 000 Loss

Furniture, household goods and appliances retailer, Pelhams Limited recorded a US$508 000 loss in the six months to September 30 2012 mainly due to a decline in sales.

The company recorded a US$586 427 profit in the same period last year. In the half-year financial results released yesterday, Pelhams said it had to encourage cash sales and shorter credit terms to reduce the credit-funding gap and increase cash flow and this resulted in the failure to restock and effectively stimulate demand.

Credit contributed 65 percent of the total sales compared to a prior year comparative of 73 percent.

The gross margin decrease to 23 percent from 27 percent the previous year was attributed to continued reliance on local products that have higher production costs.

Revenue fell 39 percent from US$6,9 million in the same period to US$4,2 million.

Cost of sales was down from US$5 million in the same period last year to US$3,252 million. Operating profit was US$447 002 down from US$1,5 million last year.

Finance costs stood at US$1,1 million up from US$901 000 in the previous comparable period.

During the same period last year, earnings per share stood at US$0,06, marginally falling to US$0,05 this year.

Pelhams board Chairman Mr Tawanda Nyambirai said the focus for the company in the last half-year was to break even through improved credit terms that are mindful of the low disposable income in the market.

"The thrust of the business going forward would be to retain a major portion of the finance charges from the debtors book and gradually move away from debtors securitisation the singular source of rebuilding the business," he said.

He said the company would also focus on improving supplier relations and credit terms.

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