Source: Sales collapse hits OK Zimbabwe. . . Plunges to US$17.81 million net loss – herald
Tapiwanashe Mangwiro
Senior Business Reporter
OK Zimbabwe’s financial distress deepened in the half-year ended September 30, 2025, with the country’s largest listed retailer sinking into a US$17,81 million net loss as collapsing sales, mounting payables, and rising short-term borrowings exposed the scale of the group’s liquidity crisis.
The interim financial results show a business under acute strain, struggling to meet supplier obligations while relying heavily on expensive short-term funding to stay afloat.
Trade and other payables rose to US$27,72 million by September 2025, only marginally down from US$28,30 million at the March year-end, reflecting persistent payment delays to creditors. Trade payables alone stood at US$22,41 million, underscoring pressure in supplier relationships at a time when stock availability remains severely constrained.
Short-term borrowings, though reduced from March levels, remained elevated at US$5,72 million. Interest-bearing loans amounted to US$2,17 million while bank overdrafts stood at US$3,55 million, highlighting the group’s dependence on costly short-term facilities to fund day-to-day operations.
In a clear signal of distress, the group acknowledged that it lacked sufficient liquidity to settle obligations as they fell due, resulting in delayed payments to suppliers.
Against this backdrop, revenue for the period collapsed to US$28,26 million, an 84,07 percent decline from US$177,43 million recorded in the same period last year.
Sales volumes plunged by 82,68 percent, from 139,88 million units to just 24,23 million units, reflecting empty shelves, supplier disruptions, and the closure of underperforming stores under a restructuring programme.
The sharp fall in turnover pushed the group from a profit of US$3,71 million in the prior period into a deep loss, despite efforts to contain costs. Operating expenses declined year-on-year but remained disproportionately high relative to the reduced revenue base.
Employee benefits amounted to US$9,51 million, while other operating expenses totalled US$11,76 million.
Utilities and backup power costs emerged as a major burden, reaching US$5,30 million during the period. The increase was driven by higher tariffs and heavier reliance on diesel generators amid prolonged power outages at several sites, further eroding already thin margins.
Finance costs rose to US$2,10 million from US$1,65 million previously, reflecting the higher cost of short-term borrowings used to plug working capital gaps in a constrained liquidity environment. Capital expenditure was cut back sharply to US$760,000, mainly for the relocation of Bon Marché Chisipite and OK Makoni branches, with most previously planned projects deferred.
Chairman Mr Herbert Nkala said the results reflected an extremely challenging operating environment and a business focused on survival rather than growth.
“Limited working capital continued to restrict stock availability across all key categories, with supplier trading terms not yet allowing the business to rebuild inventories to required levels,” said Mr Nkala. “Although engagements with suppliers have enabled the resumption of deliveries, stock cover remained below optimal levels and affected trading performance.”
To address the liquidity crunch, the board approved a US$30,5 million funding plan, comprising a US$20 million renounceable rights issue and US$10.5 million from the sale of selected freehold properties.
Shareholders approved the proposal at an extraordinary general meeting held on 17 July 2025.
The rights issue was fully subscribed, raising the targeted US$20 million. However, the process took significantly longer than anticipated and was only finalised in August instead of May. In the intervening period, the group incurred additional liabilities, further swelling creditor balances.
The planned property disposals have also been slow to materialise, with the US$10,5 million component yet to be realised. Management said sale and purchase agreements for two properties were close to being signed, while offers on three others were under review.
Despite settling about 50 percent of legacy debt using proceeds from the capital raise, suppliers have yet to restore normal trading terms, continuing to limit stock availability across stores.
As part of the turnaround plan, OK Zimbabwe closed non-viable outlets, including Food Lover’s Market franchise stores, and now operates 62 strategically located stores. Management has intensified reviews of store profitability, staffing levels, rental commitments, and internal processes to align costs with current trading conditions.
Workforce rationalisation was implemented during the period as the group sought to balance sustainability with the realities of a shrinking revenue base. No changes were made to the board, which remained actively involved in overseeing management’s response to the crisis.
In light of the loss, the board resolved not to declare a dividend for the half-year.
Mr Nkala said the board and shareholders remained supportive of the turnaround efforts, noting that progress on property disposals was critical to restoring liquidity, rebuilding inventory, and stabilising operations.
“With disciplined implementation of the restructuring and execution of the turnaround plan, the Group remains positive about returning to a sustainable growth path in the medium term,” he said.
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