OK Zimbabwe moves to sell properties

Struggling retail giant OK Zimbabwe Limited has confirmed receipt of US$20 million from a capital raise in August and is now weighing offers for supermarket properties to secure an additional US$10,5 million, as the chain battles to manage a crippling debt burden.

In a statement accompanying financial results for the year ended March 31, 2025, outgoing chairman Herbert Nkala said the funds were raised through a fully subscribed renounceable rights offer, which attracted strong shareholder participation and underwriting support.

The additional US$10,5 million will be mobilised through the sale of immovable properties, including supermarket buildings, under a sale-and-leaseback arrangement to allow continued operations at strategic locations.

"Some of the funds raised will be applied to settle part of the company's debt, and this is expected to unlock supplier credit support for restocking," Nkala said.

The capital injection is part of a restructuring plan aimed at addressing debts of US$30,34 million that accumulated under previous management, which failed to navigate exchange rate volatility, high taxes, weak utilities, and intensifying competition from the informal retail sector.

However, despite the rescue efforts, OK Zimbabwe remains in a technically insolvent position, with current liabilities of US$44,22 million against current assets of US$25,47 million - leaving just US$0,57 in assets for every dollar of short-term debt as of March 31, 2025.

Revenue for the year tumbled 53% to US$240 million, down from the prior year, with losses more than doubling to US$29,61 million compared to US$11,04 million in 2024. The company attributed the decline to supply chain disruptions, exchange rate instability, liquidity constraints, and pricing distortions from government currency controls.

Trade and other payables stood at US$29,85 million, down 12,5% year-on-year, though liquidity shortages meant the group struggled to pay suppliers on time.

"The board and management's initial focus has been to stop the decline in performance and financial distress and to steer the business back to stability, profitability, and long-term sustainability," Nkala said.

He added that the turnaround plan would also involve retraining staff after an exodus of skilled workers during the company's decline, alongside cost optimisation and expansion of both in-store and online sales strategies.

"The recovery of the company has started, but it will take some time to return to normal operations," he said.

The retailer recalled seasoned former executives earlier this year to spearhead its turnaround strategy, which is expected to determine the survival of one of Zimbabwe's oldest retail brands.