OK Zim cuts overheads 44% in FY’25, set for recovery as reforms take hold

> By Equity Axis News

HARARE — OK Zimbabwe, the last standing retail giant in a market where many chains have collapsed, has cut overhead costs to 58.7 million dollars, a 43.91 percent drop from the prior year. The savings came through downsizing, staff rationalisation, tighter logistics and the removal of noncore spending.

The discipline gave the company breathing room in a year when revenue fell 52 percent to 245 million dollars after supply chain breakdowns, smuggling, pricing distortions and pressure from the informal sector.

The group still posted a 25 million dollar loss. Its debt stood at 30.34 million dollars, including 24 million dollars in supplier arrears, 5.12 million dollars in utilities and payables and nearly one million dollars in statutory obligations. Finance costs of 3.1 million dollars continue to weigh on the business.

The recovery path is uneven but early signs are visible. A 20 million dollar rights issue completed in July 2025 and funded in August has started clearing supplier debts and is restoring stock levels.

A further 10.5 million dollars could come from a sale and leaseback of supermarket buildings. Offers have been under review since August. The plan would protect key store locations and release liquidity for restocking and capital expenditure. Capex fell to 0.9 million dollars during the downturn.

A 13.5 million dollar exchange gain from ZiG revaluations provided a one-off buffer.

Restructuring continues through debt prioritisation, organisational streamlining and operational adjustments. Staff retraining programs aim to rebuild service standards weakened by the loss of experienced workers. Store execution and e-commerce acceleration have been placed at the centre of the recovery plan.

Projections for fiscal year 2026 are supported by the retail reforms introduced in 2025.

The merger of 11 permits into a single licence has reduced compliance costs. Retailers outside tourist zones are now exempt from Zimbabwe Tourism Authority fees. Statutory Instrument 34, introduced in April 2025, removed mandatory official rate pricing and restored USD pricing flexibility. Statutory Instrument 7 strengthened ZIMRA’s power to seize smuggled goods, a major issue in a market where the informal sector holds about 65 percent share.

If enforcement improves and electricity supply rises even modestly through ZESA upgrades and private solar projects, OK’s fuel bill could fall, clearing the way for revenue recovery and a return to profit.

The reforms are expected to cut OK Zimbabwe’s annual operating costs by 3.5 to 5 million dollars. The single licence removes 1.2 to 1.5 million dollars in fees and delays. Exemption from ZTA levies outside tourist zones cuts 0.8 million dollars in fixed charges.

Statutory Instrument 34 is expected to recover 10 to 15 percent of lost volume through USD pricing and add 1 to 1.5 million dollars in margin. SI 7 is projected to protect 0.5 to 1 million dollars in gross profit previously lost to smuggling. Together, these measures support revenue growth toward 340 to 370 million dollars and the possibility of break even or profit in fiscal year 2026.

Analysts warn the reforms alone are not enough. They say government needs stronger interventions to support formal retailers and slow the rise of the informal economy.

A larger RBZ support scheme, similar to Nigeria’s 2025 NIRSAL facility, could offer twelve month financing at 12 percent for solar infrastructure and inventory. It would help OK clear its 17 million dollar arrears to suppliers.

Incentives to formalise the informal sector, including temporary tax relief and training, could reduce smuggling that undercuts formal prices by up to 30 percent. Kenya’s AGPO model is cited as a useful template.

Exchange rate stability through weekly ZiG to USD audits and a 10 percent premium cap would reduce volatility. South Africa used similar reforms to stabilise forex during a period of retail growth.

Energy support through fuel subsidies or fast tracked private solar projects of 100 megawatts by early 2026 would cut OK’s power related costs by up to 15 percent. Zambia achieved similar savings through solar retail bonds.

Without these interventions OK’s recovery may stall at break even, weakening the 2026 growth outlook. With them, and with access to dedicated financing, the company could expand and support a broader revival of the formal sector.