OK Zimbabwe in deep crisis

Once the pride of Zimbabwe's retail sector, OK Zimbabwe Limited is now fighting for survival after posting a US$25 million loss for the year ended March 31, 2025 - a dramatic fall that underscores the crisis gripping one of the country's oldest supermarket chains.

The company's results paint a grim picture of a business battered by debt, crippling power outages, supply chain breakdowns, and a fast-weakening currency.

Despite a US$20 million rights issue in July and a management shake-up in February, efforts to stabilize the group have so far yielded little progress. Stock shortages continue, suppliers are demanding cash upfront, and customers are increasingly shifting to the informal market for cheaper options.

Group chairman Herbert Nkala said revenue plunged 52% to US$245 million compared to the previous year, despite an average inflation rate of just over 15%.

"The decline is attributed to supply chain disruption, unstable exchange rates-especially in the second half of the year-liquidity crunch in the economy, and heightened competition from the informal sector compounded by exchange rate controls that distorted pricing," Nkala said.

He added that delays in settling supplier accounts forced many partners to withhold deliveries or demand upfront payment, further crippling operations and worsening product shortages.

"As a result of the factors highlighted, the group recorded a significant loss for the year of US$25 million," Nkala said.

Even with overheads reduced by 43.91%, the company could not keep pace with the decline in sales. Operating costs were driven up by rising fuel and repair expenses, as the retailer relied heavily on generators during the country's frequent power outages.

The group also recorded US$10.3 million in impairments, while negative cash flows forced it to slash capital expenditure to just US$0.9 million.

Nkala said the introduction of the Zimbabwe Gold (ZWG) currency brought temporary relief, but confidence quickly evaporated as currency shortages and depreciation set in.

"Suppliers began demanding US dollar payments or shortening terms for ZWG invoices," he said. "Exchange rate controls distorted pricing, supply chain issues worsened, and declining sales, coupled with frequent power cuts, left the business in distress."

To avert further decline, the group is pursuing a restructuring programme, including the sale and leaseback of selected properties, and investment in renewable energy to reduce reliance on diesel-powered generators.

"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.

Analysts say the retailer's challenges mirror the broader economic turbulence facing Zimbabwe's formal sector - where liquidity shortages, inconsistent policies, and a thriving informal market continue to squeeze margins and erode consumer confidence.