Retail giant, OK Zimbabwe Limited's sales volume for the quarter to June 30, 2020 went down 32 percent compared to the similar quarter in the prior year as the market grappled low disposable incomes due to effects of Covid-19.
The quarter started at a time Zimbabwe implemented a national lockdown, a period marked by restrictions to both movement and business hours in order to limit the spread of the virus.
Zimbabwe implemented a national lockdown effective March 30, although essential services remained in business but for limited business hours.
As an essential service provider, OK Zimbabwe has been operating during lockdown period but at reduced trading hours, which had a knock-on effect on the group's numbers.
Due to lockdowns implemented not only in Zimbabwe but other countries as well, businesses also had to deal with supply chain disruptions within the country as well as across the region as most countries closed their borders.
"The business environment continued to be challenging due to instability in the market.
"The Covid-19 pandemic and the resultant lockdown measures limited trading hours and the movement of people.
"The reduction in operating hours disrupted production and supply to our stores as well as constrained activity in our stores," said the group in a trading update for the quarter under review.
Additionally, the pandemic hit an already fragile economy characterised by foreign currency shortages, fuel supply challenges, erratic utilities supplies and high inflation resulting in waning disposable incomes.
In March, the beginning of the quarter under review, the annual rate of inflation stood at 676 percent before worsening to 737 percent for June.
Added the retail group: "Currency depreciation resulted in frequent price increases in a situation of limited disposable incomes leading to subdued demand."
In terms of financial performance, revenue for the period was 13 percent below same period in the prior year in inflation adjusted terms but rose 661 percent in historical terms.
While management remains upbeat of maintaining profitability, the effects of Covid-19 pandemic are likely to persist causing challenges to the economic environment.
Market watchers expect the current problems, mainly foreign currency shortages and fuel supply constraints to continue in the near future and therefore affecting business operations with increased overheads and other operating costs.
During the year to March 31, 2020, OK Zimbabwe's overheads grew by 427 percent, 37 percentage points below growth in revenue as erratic utilities supplies persisted.
According to the group's management, generator fuel costs for alternative power, electricity costs, maintenance costs and spares, bank charges and rentals were the major overheads growth drivers.
Profit for the year surged 1000 percent to $566 million from $49 million while net asset value per share rose 478 percent to 81,32 cents compared to 14,05 cents recorded in the comparable year.
At $4,5 billion, revenue for the year was 464 percent above the $801 million recorded in 2019.