• OK Zimbabwe utilized US$20 million from its August 2025 rights issue to settle approximately half of its over US$30 million supplier arrears, providing limited relief
  • Half-year results to 30 September showed an 84% revenue decline to US$28.3 million and a swing to a US$17.8 million loss, with recovery heavily dependent on delayed property disposals to clear remaining debts and restock inventories
  • Persistent challenges from informal sector competition, stock shortages, and slow asset sales progress indicate a cautious

Harare- OK Zimbabwe, Zimbabwe's largest formal retailer by store count, has settled approximately half of its outstanding supplier arrears using proceeds from a US$20 million rights issue completed in August 2025 according to tits latest financial results to FY2026.

The payment addressed roughly 50% of the debt, which had ballooned to over US$30 million due to persistent liquidity issues in a volatile economic landscape marked by informal sector dominance and currency fluctuations.

In its half-year financial results for the period ended 30 September 2025, the company reported a streamlined store network of 62 outlets, following the closure of 11 underperforming branches and select relocations. The statement outlined restructuring efforts aimed at business stabilization, including the partial debt clearance intended to restore supplier confidence and ease chronic stock shortages.

However, suppliers have not reinstated standard credit terms, leaving the retailer dependent on restrictive financing schemes that limit inventory replenishment. The remaining arrears, targeted at US$10.5 million, are slated for settlement through property disposals, with agreements for two assets approaching finalization and offers for three others still under evaluation as of late 2025.

Progress on these sales has been slower than anticipated, prompting considerations for additional disposals potentially valued at up to US$17.2 million to address ongoing working capital shortfalls.

These steps reflect the acute financial pressures facing OK Zimbabwe. The rights issue offered short-term relief by enabling partial settlements and funding cost reductions, with operating expenses down 35% so far and a further 15% cut planned by year-end.

Store rationaliSation, including exiting Food Lover's Market franchises and relocating sites like the Chisipite flagship, seeks to concentrate operations in urban areas with higher potential.

Under CEO Willard Zireva, the strategy focuses on financial stabilisation and supplier relations amid enduring issues such as power outages, ZiG currency instability, and competition from informal traders who control a significant portion of economic activity.

However, prospects for recovery remain tenuous, particularly as they hinge heavily on whether buyers materialize for the properties in question. Delays in these disposals have already constrained liquidity, exacerbating stockouts and hindering any meaningful rebound in sales volumes.

Even if sales proceed, the company faces broader sector headwinds, with peers like Choppies having fully exited Zimbabwe and Spar reducing its presence due to similar pressures from informal competition and exchange-rate challenges post-ZiG introduction.

Performance in the half-year to 30 September 2025 was markedly weak, with revenue dropping 84% to US$28.3 million from US$177.4 million previously, and sales volumes falling 83% to 24.2 million units.

This led to a US$17.8 million loss, reversing a prior US$3.7 million profit, as fixed costs, encompassing US$9.5 million in salaries, US$5.3 million in utilities and generator expenses amid load-shedding, and US$2.1 million in interest outstripped reduced revenues.

The results reflect systemic retail sector vulnerabilities in Zimbabwe. To date, OK Zimbabwe's achievements include securing the rights issue, reducing supplier arrears by half, optimizing its store portfolio, and enacting cost controls to avoid imminent failure.

These have sustained operations across 62 outlets and preserved its market position, but they fall short of reversing the downward trajectory, with trade payables remaining elevated at around US$27.7 million.

The outlook is guarded at best, dependent on prompt property sales, potential supplier concessions, and government actions to curb informal sector advantages and infrastructure gaps. Absent such interventions, like subsidies or regulatory reforms seen in other African markets sustained recovery appears improbable. A forecasted 6.6% GDP growth for 2025 may provide some macroeconomic lift, but consumer preferences for informal channels and ongoing volatility could limit benefits to formal retailers.

Therefore, OK Zimbabwe's future is pessimistic. Financial disclosures and market updates reveal deepening distress, with depleted inventories, marginal debt reduction, and escalating asset sale requirements signalLing heightened risk of prolonged contraction or further financial deterioration. Absent swift property transactions and substantial external support, the company's position remains precarious in a sector facing systemic decline.

Equity Axis News