Edgars Financial Results: Selling Ice Cream in Winter?
Who would you bet on to deliver better financial results?
A skilled salesman selling ice cream on a freezing winter day, or an ordinary one selling on a blazing summer afternoon?
Edgars’ results remind me of the first: plenty of effort — but the market just isn’t buying.
THE NUMBERS
Edgars Zimbabwe’s financial results were decent. The company reported a profit of $813 thousand, accompanied by good operating cash flows.
Most profit came from impressive cost-cutting: a 21% decrease in other operating expenses that saved $1.7 million. Since these expenses are usually fixed, this required active measures rather than just lower activity levels.
However, what stood out was that revenue fell 9% to just below $37 million, down from $41 million, with a 22% decline in units sold.
This is concerning because Edgars put in incredible effort to increase sales last year: launching new stores, improving existing ones, reviewing pricing to “motivate sales,” upgrading product portfolio and targeting, and increasing online presence across.
Further confirmation of this is that while operating expenses dropped significantly, selling expenses increased from $10.4 million to $11.1 million.
The result of all this effort? Sales dropped 9%.
Tough. Like selling ice cream in winter.
WHEN SUMMER WAS IN SEASON
Compare these results with those from about 15 years ago. In 2010, while revenue was at the same $36 million level, Edgars was experiencing mind-boggling growth.
Sales went up 222% in one year without much effort or investment. Between 2009-2010, Edgars spent only $0.4 million on capex, significantly lower than the $2.2 million spent between 2023-2024.
However by 2012, revenue had shot up to $63 million from $36 million in 2010—driven by broader economic confidence from dollarisation and a more stable political environment.
Was the management team back then that much better? Not likely.
The major difference is that one team was selling ice cream in summer and the other in winter.
Being a formal clothing retailer is incredibly challenging at present. Informal competition sells at lower costs due to lower overheads and compliance costs. Additionally, selling imitation goods without issues gives them a competitive edge.
WHAT NOW?
The good news is that Edgars controlled costs and remained profitable. Without that, they’d have had a loss of about $1 million. This is notable, especially considering peer Truworths ended up in insolvency.
Overall, it will be challenging for Edgars to have significant growth for now. The best bet is to survive the long economic winter and prepare for a more favourable summer.
What’s difficult in the Zimbabwean context is knowing when the season will change.
What do you think? Leave a comment.
PS: The above is a summarised version of a more detailed article published on Money & Moves.
