Meikles Limited Executive Chairman: Mr J.R.T. Moxon
This release is the first of two that will be issued to Shareholders prior to the forthcoming Annual General Meeting on 16 October 2014.
This release will focus on the Retail Division and the second release will focus on progress made on matters that have been included under the heading of Finance and Outlook in the Chairman's Statement for the year ending 31 March 2014.
The Retail Division consists of Meikles Stores, Barbours, and Meikles Mega Market.
Shareholders are aware that this division was handicapped by a severe shortage of working capital following losses incurred by the stringent price controls imposed immediately before the introduction of the US dollar as the relevant currency in Zimbabwe and the discontinuation of the Zimbabwe dollar. The stores were forced by regulation to sell inventories at prices below cost. In recent years, the Group has operated without any benefit from its deposits held at the Reserve Bank of Zimbabwe. The Retail Division has been unable to invest in inventories or unit improvements as it should in a dynamic environment and losses have been made as a result. The Group has been unable to provide adequate financial support to the Retail Division.
The Group will now have access to its funds held on deposit at the Reserve Bank. As a result approximately US$4 million will be injected into the Retail Division, which will have a material impact on the second half of the current financial year. We believe that the Division will return to profit and a positive cash flow in the second half of the financial year, while growing its market share. The Division is to focus on providing affordable products to the mass market while providing high-end fashion clothing and accessories through Barbours. Sales in Barbours are up on the previous year while sales in Meikles Mega Markets have been growing very rapidly. The Division is in the process of rationalizing costs through the centralization of its head office structure and combining all activities under a single structure and command with key focus on the provision of the required skills.
The Meikles Stores will operate in all their traditional properties in Zimbabwe, but in space that will be smaller and more focused than in the recent past. The remaining space in each unit will be occupied by Meikles Mega Market and in certain units by TM Supermarkets. Meikles Mega Market is a rapidly growing participant in the Zimbabwe retail environment and we shall add more units in the high density suburbs of Zimbabwe. We are pleased to announce the launch of a new activity, beauty and hair salons. We view this as a rapidly growing market and have the capacity to establish businesses in spaces that are not being fully utilized by TM Supermarkets and Meikles Mega Market, the object being to secure beneficial occupation within all our various properties. We expect the beauty and hair salons to make an immediate impact and contribute positively to our profits and cash flows while making efficient use of our space. We have given this top priority and expect the first salon to be opened in October and others to be launched before the end of the year. Shareholders will witness these developments, which are now well underway, and will result in a revitalized Retail Division.
It is expected that these developments will ensure that by the end of the calendar year, the Meikles’ Retail Division, together with its sister company TM Supermarkets, will be the largest retailer in terms of sales in Zimbabwe. The Retail Division will be profitable, it will have strong positive cash flows and a strong management team with passion and focus.
By order of the Board
2 October 2014