Furnmart jittery on subdued trading conditions
Furnmart, a leading furniture retailer is expecting subdued trading conditions going forward, further putting their business on slippery ground especially after posting 15 percent decline in profits to P47.7 million for the year to July 2016.
The group’s revenue declined by 2.4 percent to P1.1 billion as a result of lower sales in mechandise caused by a stronger Pula. The operating income also declined by 6.1 percent due to higher total debtors costs.
The group has also closed down its operations in Zambia as trading conditions in the country negatively affected profits. Furnmart Chairman John Mynhardt said in the published results that a decision to stop Zambia operation will have positive impact on the group’s profitability in the near future.
“The company commenced the winding up of the Zambian operations on 1st November 2016 and it is confident that this will have a positive impact on future profitability,” he said. Furnmart, through its Home Corp store, has operations in Botswana and Namibia with a distribution centre in South Africa.
He said the group will continue with moderate new store growth in the region as the outlook for the regional economies remains uncertain. “Management anticipates that trading conditions are likely to remain subdued in the foreseeable future,” said Mynhardt.
Mynhardt stated that although the quality of debtors’ books in the group has largely been maintained potential job losses in Botswana due to closure of certain mines and the group’s decision to exit Zambia have necessitated an increase in the provisions of doubtful debt. However the group opened five new Furnmart stores during the period.