Furnmart fights back

SHARE   |   Monday, 09 January 2017   |   By Kabelo Adamson
Furnmart boss, John Mynhardt  Furnmart boss, John Mynhardt

Furniture retail group Furnmart plans to sell to sell its non- performing branches as way to stem losses from non-performing businesses. Then listed group, which runs a number of stores across the SADC region, made this announcement in its latest annual report. Though the group says it will sell non-performing branches, it says where viable, non-performing businesses will be subjected to a turn-around strategy. In the past year, Furnmart took the decision to close the Zambian operations due to continual trading losses, a weakening economy, US Dollar-based rentals and a volatile currency. The termination of operations in Zambia has made the management to believe that this was the best decision business-wise that will lead to profitability in the future. Furnmart has had a relatively tough year with revenue 2.4 percent less than the previous year arising from lower merchandise sales, caused in the main by the stronger Pula. The group’s Profit before tax of P79.4 million for the year was 10.0% lower than the prior year, primarily as a result of higher debtors’ costs and there are fears that job losses in the mining sector together with the decision to exit the Zambian market could increase impairments.

Other than the mentioned factors, Furnmart says the quality of the debtors’ books in the group has largely been maintained. The two factors have in the past financial year contributed to an increase of 22.3% in total debtors’ costs leading to the company announcing that will maintain its conservative approach to credit granting and provisioning and continue to explore alternative ways to assist customers in purchasing furniture they can afford. While Furnmart is looking into closing some of its stores, the furniture retail group says it will continue with moderate new store growth in the region as the outlook for regional economies remains uncertain. It is anticipated that trading conditions are likely to remain subdued for the foreseeable future, but management is confident that early signs of improvement on the credit side of business are beginning to show. In addition to focusing on non-performing units, Furnmart wants to continue focusing on improving gross margins, productivity and efficiencies and containing costs.