Furnmart records poor results
Pauline Dikuelo | Friday January 9, 2015 13:17
This is despite the company’s year-on-year increase in revenue, which was recorded in the past four years.
Profit after tax plunged during the year under review despite stagnation incurred in the past three years. The regional furniture retailer’s profit before tax has declined by P11 million, from P123 million in 2013 to P112 million last year.
Commenting on the results, Furnmart chairman John Mynhanrdt attributed the shrinking of profits to the continuing deterioration in the trading environment, which he said had caused the board of directors to be more prudent in how it has assessed the company’s performance and the value of assets.
He however said that they are mindful of the uncertainty in the markets and the reported experiences of the company’s regional competitors. “As a result further provisions has been raised on the debtors’ book and a prior recognition of a deferred tax asset has been reversed since the value reflected,” he said.
The company has also suffered a P20 million foreign exchange loss on net receivables from its foreign operation occasioned by the continued strengthening of the Pula against the South African Rand, the Namibian Dollar and the Zambian Kwacha during the year.
“This figure is P10 million more than that which was incurred last year and has been exacerbated by the growing size of our foreign operations relative to our Botswana business,” said Mynhanrdt.
However, the tough market conditions have caused the group to scale its growth plans down as it opened six more new stores during the year compared to their projected 10 new openings.
“The management’s attention was instead focused on sales generation in the existing outlets, debt collection and increasing operational efficiencies particularly in the area of store replenishment,” he added.
Mynhanrdt further pointed out that there had been noticeable deterioration in the performance of all the debtors’ books during the last months of the financial year, a trend that has been reported to continue into the current year.
He also said maintaining sales growth would be a challenge even with imposition of stricter credit granting criteria.
“Our competitors will be compelled to adopt similar strategies and we can therefore expect to encounter stiff competition for the custom of those that have formal employment,” he said.
Furnmart rolled out their new in-store IT operating system, which has been utilised in 72 percent of their stores and is expected to be operational in all shops end of March this year. Leonard Waldeck has been appointed as a non-executive director and chairman of the Risk Audit and Compliance Committee by Furnmart’s board of directors.