HARARE — Zimbabwe’s TM Supermarkets, in which South African grocer Pick n Pay has a 49% stake, has seen increased volumes and margins from the four shops it refurbished with money Pick n Pay invested in the operation.

Zimbabwean group Meikles owns the remaining 51%.

The retail sector in Zimbabwe has witnessed significant competition, with rival operator OK Zimbabwe also revamping its operations. TM Supermarkets was hoping to grab a bigger share of the market following its partnership with Pick n Pay, said economist John Robertson.

"The involvement of TM with Pick n Pay is in the hope that they can capture a bigger market share than they had before," Mr Robertson said.

However, rival operators are also "constantly trying to improve" their services, with OK Zimbabwe lining up further refurbishment programmes to modernise its stores.

Mr Robertson said the $13m Pick n Pay had invested in TM would "likely make it much more competitive".

TM Supermarkets has already registered significant returns from the four shops it has renovated. Two of these stores have been rebranded as Pick n Pay.

"TM has seen increased volumes and margins from the refurbished branches," Meikles said in an interim management report on Monday.

Group revenue — across all of Meikles’ city and resort hotels, tea estates, retail and departmental stores — increased by 16% in the nine-month period to the end of December.

"(Consequently), operating profit is showing a significant increase compared to that achieved in the prior year," Meikles said.

Group costs had marginally increased by about 3% during the same period, it said.

Despite the firming revenue in the supermarket chain division, the performance of Meikles’ departmental stores had "not measured up to expectations".

Meikles said this reflected challenges in Zimbabwe’s business and operating environment. "The revenues have not grown, while credit has been deliberately curtailed pending improvement in the economy."

Denford Mutashu, an executive member with the Retailers Association of Zimbabwe, said last month that retail margins had continued to decline although the bigger, more established operators were said to be better off than the new entrants and smaller retailers.

In the half-year period to the end of September last year, Meikles said profit before taxation amounted to $1.02m compared with a loss of $7.04m in the previous corresponding period.

After-tax profit jumped to $767,000 against the prior year’s loss of $5m.