In a year when consumer spending remained under pressure and
informal traders continued to garner significant market share, Meikles
Limited’s supermarket division delivered a remarkable turnaround, recording its
first operating profit in two years.
TM Pick n Pay – which contributes approximately 98 percent of
group revenue – swung from a ZWG516.3 million operating loss to a ZiG63.7
million profit, driven by improved margins and disciplined cost management.
“Management delivered improved margins, a substantial
reduction in losses, positive operating cash flows, and a return to operating
profitability within the Group’s core supermarket business,” Chairman
Fayaz King told shareholders.
The supermarket chain achieved a gross profit margin of 28 percent,
up from 23 percent in the prior year, despite intense competition from the
informal sector which continues to account for a significant share of economic
activity.
King attributed the recovery to “disciplined execution
of strategic priorities” and a more stable operating environment following
the repeal of Statutory Instrument 81A, which improved pricing flexibility
within the multi-currency framework.
Unit sales volumes increased by six percent, reflecting
resilience in customer demand and market share gains achieved during the second
half of the year. However, increased customer footfall was offset by lower
average customer spend.
The contribution of USD-denominated sales increased
significantly during the year, averaging 45 percent compared to 23 percent in
the prior year. This enhanced procurement efficiencies, improved stock
availability and reduced pressure on working capital requirements.
Operating costs increased marginally by one percent,
reflecting management’s ongoing focus on cost containment. The segment funded
its capital expenditure of US$3.2 million entirely from internally generated
cash flows.
“The supermarket segment funded its capital expenditure
from operating cash flows, has no external borrowings, and continues to meet
its obligations as they fall due,” the company noted in its financial
statement.
The business maintained a strong financial position
throughout the year, with no utilisation of overdraft facilities or bank
borrowings.
Looking ahead, the group is actively evaluating
opportunities to expand the supermarket branch network, with several potential
sites currently under consideration.
First-quarter trading has been encouraging, with revenue
growth of 13 percent in USD terms supported by a 22 percent increase in unit
sales volumes.