Published: 4 hours ago

Meikles Limited's trade payables more than doubled to ZiG925,78 million in its financial year ended February 28, 2025, sparking fears of deepening debt pressures within Zimbabwe's formal retail sector and drawing parallels with the supplier debt crisis that has recently rocked rival OK Zimbabwe.

In the prior period, Meikles' trade payables stood at ZiG397,64 million, reflecting a significant year-on-year increase that underscores the rising liquidity challenges confronting the country's formal retailers.

Earlier this year, OK Zimbabwe disclosed it owed suppliers US$30,34 million after struggling to meet payment obligations — a crisis that severely disrupted its operations. The parallels with Meikles are now raising broader questions about the financial health and stability of the country's traditional retail giants.

Meikles, which operates 74 TM Pick n Pay supermarkets through a 51-49% joint venture with South Africa's Pick n Pay Group, acknowledged the mounting pressure in a statement accompanying its latest financials.

"The credit period on purchases ranges from 7 to 60 days (2024: 7 to 60 days) from the date of the statement. Suppliers are paid predominantly on a prepayment or cash basis. Interest is charged by certain but not all suppliers on overdue payables," the company stated.

Despite the ballooning obligations, Meikles insisted its payables reflect fair value and that the business continues to meet short-term commitments.

Revenue Under Pressure
The group reported total revenue of ZiG12,51 billion, marking a 1,85% decline from the previous year. Of this, the supermarket segment contributed a staggering 99,61%.

Acting chairperson Fayaz King attributed the revenue drop to a volatile trading environment, noting that although unit sales grew by 1%, performance fluctuated sharply across the quarters.

"Units sold declined by 19% in the first quarter, increased by 24% in the second quarter, rose by 8% in the third quarter, and then decreased by 3% in the fourth quarter," King said.

King further highlighted how state controls on in-store exchange rates placed formal retailers like Meikles at a disadvantage compared to informal traders, who offered more competitive US dollar pricing aligned to parallel market rates.

Foreign currency revenue accounted for 23% of total sales, up from 17% the previous year, but still lagging behind broader market trends where USD transactions dominate.

"This revenue mix fell far short of the average mix of transactions conducted in foreign currency within the economy, creating challenges in trading terms with suppliers, further compromising formal retail versus the informal sector," King said.

Mounting Liabilities, Declining Profits
Meikles' non-trade liabilities — covering accruals, taxes, and provisions — also surged, nearly doubling from ZiG131 million to ZiG260 million, signalling growing short-term financial strain.

The group posted a ZiG264,02 million loss from continuing operations, a sharp reversal from a ZiG429,2 million profit the previous year. The retail segment alone accounted for a loss of ZiG206 million.

King attributed last year's profit largely to a one-off net monetary adjustment driven by high inflation, which was less pronounced this financial year.

"The group reported a loss of ZiG264 million from continuing operations, a decline from a profit of ZiG405 million in the previous year," King said.

"This year, the net monetary adjustment declined by 61% to ZiG628 million (Previous year: ZiG1,6 billion) as inflation was not as pronounced as in the previous year."

Operating costs rose by 4% to ZiG3,4 billion, largely due to increased USD-denominated expenses.

Outlook Hinges on Policy Shift
Despite current pressures, King sounded an optimistic note about future prospects, citing recent policy reforms aimed at levelling the playing field between formal and informal retailers.

"The repeal of Statutory Instrument 81A through SI34 of 2025 marks a turning point for formal retail, restoring fairer trading conditions and enabling price competitiveness in USD," he said.

He insisted Meikles' supermarket segment remained well-positioned, maintaining healthy liquidity and higher inventory levels compared to competitors.

Total assets rose by 27% to ZiG3,23 billion, driven largely by a 94% increase in cash and bank balances.

Yet, with rising unpaid obligations and shrinking margins, Meikles' growing liabilities mirror the wider challenges threatening the long-term viability of Zimbabwe's formal retail sector.
- Newsday

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