HARARE – Edgars Stores Limited has introduced competitive price USD creditor accounts and USD loans through Club-Pls to mitigate against the effects of high interest rates on local currency account performance.
The RBZ raised interest rates from 80% to 200% per annum in the first half to prevent cheaper speculative borrowing from harming exchange rates and to reduce inflation which has caused the depreciation of the local currency.
Edgars CEO TjeNdlovu said that the central bank’s increase in interest rates had an impact on the company’s credit operations since the company relies on ZWL borrowing to finance the credit that it extends to its customers.
The group was prompted to devise an innovative solution to mitigate the impact of high interest rates on its business responsibility, as it reluctantly increased the rate passed on to its customers and also introduced a USD loan through Club-plus.
“We have recently, in the month of July, introduced competitive price USD creditor accounts in our retail chain and USD loans through Club-Pls, our microfinance subsidiary,” she added.
As the group focuses on shareholder value creation, the decision to introduce a USD loan is critical because the USD can withstand economic shocks while maintaining its value, and the group has begun the USD credit facility, which accounts for approximately 60% of total credit at the moment.
Going forward, the group expects to increase its volumes during the summer season, when there will be a lot of movement, whether it is domestic or international tourism. Some are opening pop-up shops in popular vacation destinations in the United States, anticipating a surge in domestic travel.
“We expect our full year performance to have the customary second half year and to reflect our usual increase in trading momentum as we progress into summer,” Ndlovu said.
Meanwhile, the group continues to look for profitable locations as the group is on an expansion drive to provide customers with a world-class shopping experience.
During the period ended June 30, 2022, three new stores were opened and the group will continue to source for good locations.
These three new stores include Jet in the 1st street in Harare, another one in Avondale, and Jet in Gutu. The group also relocated Edgars to a big space in Borrowdale in a bid to ensure customers have easy access.
“We will continue to look for and follow up on lucrative locations. Additionally, a number of existing shops have been identified for refurbishment in the second half of 2022, which will be largely dependent on cash availability,” Ndlovu said.
On the remittance side, the group said that the business continues to grow and that during the period under review, the group experienced significant growth compared to last year.