OK Zimbabwe Limited’s loss more than doubled to US$25 million for the year to March 2025 after its revenue plunged by more than 50 percent, weighed down by supply chain disruptions and growing competition from the informal market.
The giant retailer recorded a net loss of US$12,4 million for the financial year ended March 31, 2024. The group’s revenue dropped by 52 percent to US$245 million during the period under review, compared to the previous year.
However, the group is now on a recovery path and the board and management remain confident that the organisation will achieve its goal of delivering consistent shareholder returns in the medium term.
This comes as OK is looking forward to an additional capital raise of US$10,5 million through the sale of immovable properties and has several offers currently under consideration.
Earlier, OK raised US$20 million via a rights offer, as management sought to mobilise resources to establish supply chains and pay off mounting debts.
The group attributed the sharp revenue decline to a combination of factors, including limited trading due to stockouts and intensified competition from informal players, who enjoy limited regulatory controls.
Supply chain disruptions were a key challenge during the period under review, as delays in settling supplier accounts led to withheld deliveries and demand for upfront payments, which constrained operations.
“Revenue decline is attributed to supply chain disruption and heightened competition from the informal sector, compounded by exchange rate controls that distorted pricing.
“Supply chain disruptions were a result of the group failing to settle suppliers’ accounts on time, leading to some withholding deliveries while others demanded payment upfront. These challenges resulted in the group’s operational capacity being impacted negatively.
“The recovery of the group has started, but it will take some time to return to normal operations. The board and management are confident that with proper focus and diligence, the ultimate goal of delivering consistent shareholder returns in the medium term is attainable,” said OK Zimbabwe chairman Mr Herbet Nkala in a statement accompanying the group’s financial results for the year to March 2025.
OK Zimbabwe said the disruptions severely affected its operational capacity, leading to reduced production efficiency and lower output across several business units.
Following a comprehensive impairment review of all cash-generating units (CGUs), the company recognised an impairment charge of US$10,3 million, as the recoverable values of certain CGUs fell below their carrying amounts.
Despite these setbacks, the group recorded a net exchange gain of US$13,5 million, primarily from the remeasurement of monetary liabilities following the devaluation of the Zimbabwean dollar to correct pricing distortions.
However, the gain was not enough to offset the impact of reduced revenues and impairments, resulting in a net loss of US$25 million for the year.
“As a result of the factors highlighted, the group recorded a significant loss for the year of US$25 million.”
The group remains focused on stabilising its operations through tighter cost control measures, improved supplier engagement, and exploring new revenue streams to enhance resilience in a challenging operating environment.
The group also indicated that it faced a decline in retail skills as trained and experienced personnel left employment for better opportunities and now looks forward to retraining the existing staff to raise levels of customer service and standards of performance.
The country’s largest retailer is facing significant operational and financial challenges due to a combination of factors, including supply chain disruptions, general economic challenges and high operating costs. – Herald
