Furnmart, the newly rebranded furniture establishment, slammed onto “real revenue growth” pedals to accelerate by 16 percent, but warned that the economy is not yet out of the woods of the global downturn.
According to the results, revenue went up 16 percent to P 565.7 million during its full year to end of July–a move that was applauded by John Mynhardt, the founder and managing director of the empire that is spread across three countries.
Further, the operations of Mynhardt also made some sterling performance as income after taxation edged up by 64 percent to P80.6 million.
The group, which is one of the country’s best known exports, after beef, diamonds and tourism as it is being entrenched in the neighbouring countries of Namibia and South AfricaÔÇöunder different names ÔÇô opened three new stores during the period and has put the opening of the first Home Corp in South Africa on the cards.
“This high rate of income growth relative to revenue growth can be largely be explained by three factors:
“First is the material reduction in impairment brought about by further improved collection on customer accounts. This is despite a recent reversal in this trend,” Mynhardt said.
“The main reason for the significant growth in income after tax is that last year’s mid-year results were relatively weak, as they included substantial start up for the Home Corp division,” Martin Makgatlhe, the Managing Director of Motswedi Securities has said.
“Management has implemented several changes to the debtor collection strategy and these changes have been reflected on improved collections, reduced arrears and reduction in the provision of bad debt,” he added.
Furniture Mart is proving to be one of Botswana’s biggest companies and has branches in Namibia and South AfricaÔÇöunder Xtreme stores. In South Africa, the company is mainly concentrated in the rural areas but it is thought that it will eventually move into the urban areas.
However, the company said in its full year results announcement that the impact of the recession have caught up with it as it is beginning to experience a slow-down in consumer demand but added that it has set aside considerable cash that will see it through the difficult period.
“We have maintained a substantial cash reserve to see us through this difficult period and also take advantage of any opportunities that may arise. This includes the availability of prime site at favourable rentals,” Mynhardt said.
Further, the company, which operates under Xtreme Discount, is expected to benefit from the larger South African population which tops 40 million but it will face resistance from some of the already existing and Johannesburg Stock Exchange listed stores such as Ellerines and Joshua Doore, which have close to 200 outlets in that country alone.