HARARE — ZIMBABWE’S TM Supermarkets, in which Pick n Pay is a partner, has invested a further $25m into the retail chain, with the money aimed at transforming its retail outlets through refurbishment of the group’s 50 stores across the country.
Two of TM Supermarkets’ outlets have already been re-branded into Pick n Pay stores following the South African retailer’s investment in the Zimbabwean supermarket chain operator. Pick n Pay controls about 49% of TM Supermarkets, while Zimbabwe Stock Exchange-listed Meikles Africa owns the remaining 51%.
Analysts said on Monday the refurbishment exercise, will enhance the group’s bid to modernise its stores in a sector that already had stiff competition. TM Supermarkets is likely to capitalise on its expansive network of branches although rival operator OK Zimbabwe and other smaller retailers are expected to put up a fight to grow and defend their market share.
"TM Supermarkets is now in a position where it can secure investment capital and this is key in a Zimbabwean context, where most businesses battle to raise capital. A strong capital base will enable TM to expand and modernise its stores and attract more shoppers," said independent economic analyst Moses Moyo.
Meikles chairman, John Moxon said the fresh capital investment will "re-position TM Supermarkets as a leader in a very competitive industry".
"The $25m investment, together with a substantial internal generation of cash from increased earnings, will soon be available for the renovation of existing supermarkets and the addition of new opportunities," said Mr Moxon.
In November last year, Mr Moxon said "forward planning" suggested the retail operations would "require further funding" to accelerate the refurbishment exercise and to open new supermarkets. There are plans to open new stores across the country, although Mr Moxon would not provide precise timelines.
During the 11-month period to the end of February (2013), pre-tax profits in TM Supermarkets "exceeded those of the previous year by in excess of six-fold," while the company has also been buoyed by the performance of the two Pick n Pay stores opened in Harare last year.
In the half year period to the end of September last year, Meikles — which also runs departmental stores and city and resort hotels — said profits before taxation amounted to $1.02m compared to a loss of $7.04m incurred in the previous corresponding period. As a result after tax profits jumped to $767,000 against the prior year period’s loss of $5m.
There has been growing pressure on Zimbabwean retailers to obtain their stock from local producers and suppliers, despite the subdued performance of local industry and manufacturing sectors.
The decline in industry capacity utilisation — which has stagnated below 50% in the past half year period — has been blamed on the poor performance of the agriculture sector.