• TM Pick n Pay returned Meikles to operating profitability as unit volumes increased 6%, gross margins expanded to 29% and the Group swung to an operating profit
• Customers visited stores more frequently but spent less per trip, showing the retailer is rebuilding profitability through market share gains
• Operating cash flow almost quadrupled while USD sales doubled to 45% of supermarket revenue, strengthening liquidity, supporting store expansion

Harare- Meikles Limited has delivered the clearest evidence yet that its core supermarket business is emerging from years of losses. For the year ended 28 February 2026, the Group swung to an operating profit of ZWG7.1 million from an operating loss of ZWG564 million a year earlier, while the loss after tax narrowed 33% to ZWG183.8 million.

The turnaround was driven almost entirely by TM Pick n Pay, which contributes 98% of Group revenue.  Revenue declined 4% to ZWG12.56 billion, equivalent to management's estimate of about US$394 million. Units sold, however, increased 6%. Customers came through the doors more often, but spent less on each visit.

That combination of higher volumes and lower average basket values is the clearest evidence yet that Zimbabwe's largest supermarket chain is rebuilding profitability by defending and reclaiming market share in a consumer economy where disposable incomes remain under pressure.

The divergence between volumes and revenue explains almost every major movement in the results. Formal retailers traditionally rely on a combination of customer traffic, basket growth and price inflation to expand revenue. TM Pick n Pay achieved only one of those three. Customer traffic strengthened sufficiently to lift unit volumes despite a difficult consumer environment, yet average spend per visit continued to soften as households concentrated expenditure on essential groceries and managed purchases more carefully.

Instead of waiting for consumer spending to recover, the group adjusted the business around the customer that exists today.

Gross margins expanded to 29% from 23%, one of the strongest improvements reported by the Group in years. Operating expenses increased only 1% despite inflationary pressures, allowing a larger proportion of every sales dollar to flow into earnings. EBITDA increased 40% while the supermarket division itself moved from an operating loss of ZWG516.3 million to an operating profit of ZWG63.7 million.

The business generated higher earnings without depending on stronger revenue growth, demonstrating that operational discipline rather than pricing became the primary source of profit expansion.

The currency mix also changed materially during the year. United States dollar sales increased from an average contribution of 23% to 45%, improving procurement flexibility and inventory replenishment. For retailers, stronger foreign currency collections extend beyond the cash register. They shorten supplier payment cycles, improve stock availability and reduce the working capital pressure associated with sourcing imported merchandise. Better stocked shelves then reinforce customer loyalty, creating a cycle where stronger liquidity supports higher volumes, which in turn generate additional liquidity.

That operating model increasingly separates stronger retailers from weaker competitors. Zimbabwe's informal retail sector continues competing aggressively on convenience and pricing, yet scale remains an advantage when inventory is consistently available and procurement becomes more efficient. Customers may reduce the value of each shopping trip, but they continue returning to retailers capable of maintaining product availability across multiple categories. In this environment, market share is won through execution as much as pricing.

Rather than slowing investment during a period of weak consumer demand, TM Pick n Pay opened a new supermarket in Shurugwi and funded approximately US$3.2 million of capital expenditure entirely from internally generated resources. The supermarket business operated without overdraft facilities or interest-bearing borrowings throughout the year, allowing expansion without increasing financial leverage. That approach preserves financial flexibility while positioning the business to benefit when consumer spending eventually strengthens.

Cash generation improved even faster than accounting earnings. Operating cash flows increased to ZWG229 million from ZWG58 million in the prior year, providing the liquidity required to finance capital expenditure while maintaining balance sheet strength. The significance of that improvement extends beyond the reported loss after tax.

Inflation accounting continued distorting statutory earnings across Zimbabwean financial statements, whereas operating cash flow provided a clearer indication of the resources available to reinvest, expand stores and strengthen operations. The ability to fund expansion internally demonstrated that the recovery is translating into financial capacity rather than remaining confined to accounting adjustments.

Another development suggests the turnaround is carrying into the new financial year. The group  reported first-quarter revenue growth of 13% in United States dollar terms alongside a 22% increase in unit volumes. The acceleration indicates that customer traffic continued strengthening after year-end while management evaluates further store expansion opportunities. The operational improvements achieved during FY2026 therefore appear to be carrying into FY2027 rather than ending with the reporting period.

Zimbabwe's formal retail sector has spent several years competing against weakening household purchasing power, informal traders and volatile macroeconomic conditions. The latest results indicate that recovery no longer depends entirely on consumers spending more. Retailers capable of improving procurement, maintaining stock availability, managing operating costs and protecting margins can rebuild earnings even while customers continue limiting basket sizes. Market share becomes the first stage of recovery, revenue growth follows later as household incomes improve.

For Meikles, that sequence has important valuation implications. The company has demonstrated that profitability can recover before consumer demand fully normalises. Higher customer traffic, wider margins, stronger operating cash generation and disciplined capital investment are creating a stronger earnings base ahead of any broader recovery in discretionary spending. If household purchasing power improves while these operational gains are retained, the next phase of earnings growth could be materially stronger than the turnaround already reflected in the latest results.

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