THE Pick n Pay Group has said the strengthening of the local currency in Zimbabwe is likely to drive volume growth until August, as the Southern African country heads to an election.
In a trading update for the first half of the financial year 2024, the retailer said in Zimbabwe, the company’s TM Pick n Pay stores are facing currency volatility and depressed disposable income, which may impact sales in the coming months.
“A bit of currency strengthening in Zimbabwe may help drive volumes between now and August as Zimbabwe heads into an election year. TM Pick and Pay is poised to benefit from spending associated with elections,” it said in a statement of the financials.
The Zimbabwe dollar has been gaining strength against the US dollar following a raft of measures by the Government to stabilise the exchange rate.
The Zimbabwe dollar again firmed to $4 537 against the US dollar on the Reserve Bank of Zimbabwe (RBZ) wholesale foreign currency auction held on Thursday.
The strategic interventions introduced by authorities include a directive for all import duties to be paid in Zim dollars, except for luxury items, the transfer of external payment obligations from the RBZ to the Treasury, and the introduction of the wholesale foreign currency auction for banks. Further, the Treasury has also directed that all Government institutions collect fees and charges in the local currency and that 50 percent of corporate tax payments be made in Zimbabwe dollars, while the central bank raised its bank policy rate from 140 percent to 150 percent
According to the company’s trading update, Pick n Pay’s Rest of Africa segment, which Zimbabwe is part of, saw sales increase by 15,9 percent. It said in Zambia, there is greater stability, although consumer spending remains limited.
“With the incoming IMF relief, we are likely to see a better Zambia in FY24 as the country starts to draw down from its US$189 million, which is likely to influence the country’s spending.
“Despite the challenges, Pick n Pay remains committed to its expansion plans in the rest of the continent, and the company’s strong performance in this segment is encouraging,” reads the update.
According to the trading update, group sales for the first four and a half months of FY24 increased by 4,8 percent, with South Africa’s sales growth for this period at 4,4 percent.
Clothing sales in stand-alone stores grew by 10,9 percent, while Group liquor sales for the period grew by 9,8 percent.
Online sales growth for the period was 75,3 percent, sustaining the strong online sales growth momentum reported for FY23.
