ENVIRONMENTAL OVERVIEW

  • Inflationary pressures that gathered momentum at the end of the last financial year have persisted, with month-on-month inflation for June 2022 increasing sharply to 30.7% from 21% in May 2022.
  • Year on year inflation for the month of June 2022 was reported at 191.6%, a significant increase from 72.7% reported at the end of the last financial year.
  • The willing buyer willing seller interbank market exchange rate against which formal businesses are required to benchmark pricing is not as attractive as the rates offered in alternative unregulated markets. This continues to impact competitiveness of our USD prices, impacting foreign currency collections.
  • Interest rates were increased to 200% with effect from 1 July 2022, including on debt arrangements entered into before that date. This has made borrowing costs excessive resulting in liquidity pressures across the entire supply chain.
  • Our stores are reasonably stocked, although we continue to experience temporary supply gaps on some key volume drivers.

BUSINESS PERFORMANCE

  • Sales volumes for the quarter grew by 1% against prior year.
  • Sales values increased by 237% from prior year in historical terms and grew 40% in inflation-adjusted terms.
  • Profit margins are consistent with prior year and in line with the Group’s plans for the current year.

OUTLOOK

  • Inflation headwinds expected to dominate the trading environment in the short term. The market desperately needs a foreign exchange pricing system that is market determined and stable.
  • Despite market wide liquidity challenges, the business remains on sound footing and has in place measures to cover not only all working capital needs, but also planned capital expenditure in line with our G.R.O.W.T.H strategy.
  • The business continues to engage authorities on the adverse effects of IMT tax on formal businesses.
  • The Group re-opened the Bon MarchĂ© Mt Pleasant store in July 2022 with refreshed and upgraded facilities in line with its refurbishment program. The business will upgrade more stores and also implement strategies to increase footprint and grow market share during the year.