OK Zimbabwe, the country’s largest listed retailer, is facing a deepening financial crisis, reporting a staggering US$17.81 million net loss for the half-year ended September 30, 2025. The dire results, coupled with plans for further store closures and property disposals, highlight the severity of the retailer’s liquidity crunch. Adding to the turmoil, Board Chairman Herbert Nkala has stepped down, marking a significant shift in leadership as the company struggles to regain its footing.
Nkala’s departure, initially announced in June, was formalised at the group’s annual general meeting (AGM) on December 11. OK Zimbabwe acknowledged Nkala’s 13 years of service, seven as chairman, stating: “The OK Zimbabwe Limited board would like to advise members that Mr Herbert Nkala retired from the board of directors with effect from December 11, 2025. Mr Nkala retires after having served 13 years on the board, seven of which he served as board chairman.” The company expressed gratitude for his contributions, wishing him well in his future endeavours. The board has deferred the appointment of a successor to a later date.
The retailer has also announced the appointment of five new non-executive directors: Charles Nkululeko Msipa, Tracey Mutaviri, Tawanda Masose, Brian Mabiza, and Everton Mlalazi. OK highlighted the extensive experience each new director brings to the board.
Charles Msipa, a qualified lawyer with experience in law, banking, beverage marketing, manufacturing, and distribution across multiple continents, retired as managing director of Schweppes Holdings Africa Limited in April 2025 after 20 years. OK noted, “Under his leadership, the company navigated significant industry changes and expanded its market presence across Africa.” Tracey Mutaviri brings nearly four decades of experience in academia, senior executive leadership, and public sector governance, with expertise in marketing and general management. Tawanda Masose has extensive experience in investment management, mergers and acquisitions, and portfolio oversight across various sectors. Brian Mabiza, a chartered accountant, brings over 25 years of senior leadership and advisory experience in audit, assurance, and governance. Everton Mlalazi has over 15 years of experience in business development, enterprise scaling, and strategic transformation.
These appointments follow the resignations of Rose Mavima, Kiitumetsi Zawanda, Wonder Stan Nyabereka, and Rutenhuro James Moyo at the conclusion of the AGM. Lyndsay Webster-Rozon and Tawanda Lloyd Gumbo, who were scheduled to retire by rotation, did not offer themselves for re-election.
The interim financial results paint a bleak picture of a business struggling to stay afloat. Revenue plummeted to US$28.26 million, a staggering 84.07 percent decline from the US$177.43 million recorded in the same period last year. Sales volumes also plunged by 82.68 percent, from 139.88 million units to just 24.23 million units. This dramatic decrease reflects empty shelves, supplier disruptions, and the closure of underperforming stores as part of a restructuring programme.
Board chairperson Herbert Nkala, before his departure, attributed the decline to several factors, stating that the results reflected “an extremely challenging operating environment and a business focused on survival rather than growth.” He explained, “Limited working capital continued to restrict stock availability across all key categories, with supplier trading terms not yet allowing the business to rebuild inventories to required levels. Although engagements with suppliers have enabled the resumption of deliveries, stock cover remained below optimal levels and affected trading performance.”
The sharp fall in turnover pushed the group from a US$3.71 million profit in the prior period into a deep loss, despite efforts to contain costs. Operating expenses declined year-on-year but remained disproportionately high relative to the reduced revenue base. Employee benefits totalled US$9.51 million, while other operating expenses reached US$11.76 million. Utilities and backup power costs emerged as a major burden, climbing to US$5.30 million due to higher tariffs and heavy reliance on diesel generators amid prolonged power outages, further eroding margins. Finance costs rose to US$2.10 million from US$1.65 million, reflecting the higher cost of short-term borrowings used to plug working capital gaps. Capital expenditure was cut sharply to US$760,000, mainly for the relocation of Bon Marché Chisipite and OK Makoni branches, with most planned projects deferred.
The company’s financial distress is further evidenced by its inability to meet supplier obligations. Trade and other payables stood at US$27.72 million by September, only marginally down from US$28.30 million at the March year-end, reflecting persistent delays in settling creditors. Trade payables alone amounted to US$22.41 million, underscoring pressure on supplier relationships at a time when stock availability remains critically low. Short-term borrowings, though reduced from March levels, remained elevated at US$5.72 million, comprising US$2.17 million in interest-bearing loans and US$3.55 million in bank overdrafts — highlighting the group’s dependence on expensive facilities to fund day-to-day operations. The group admitted it lacked sufficient liquidity to settle obligations as they fell due, resulting in delayed supplier payments.
To address the liquidity crunch, the board previously approved a US$30.5 million funding plan, comprising a US$20 million renounceable rights issue and US$10.5 million from the sale of selected freehold properties. Shareholders approved the proposal at an extraordinary general meeting on 17 July 2025. The rights issue was fully subscribed, raising the targeted US$20 million, but the process took longer than anticipated and was only finalised in August instead of May. In the intervening period, the group incurred additional liabilities, further swelling creditor balances.
The planned property disposals have also been slow to materialise, with the US$10.5 million component yet to be realised. Management said sale and purchase agreements for two properties were close to being signed, while offers on three others were under review. In addition to the already earmarked properties, OK Zimbabwe is considering selling an additional US$17.2 million worth of properties to further alleviate its working capital shortages. “The group has additional owned properties worth US$17,2 million, and these may be disposed of to fund working capital requirements, should it be necessary, and subject to board approval,” the company stated.
Despite settling about 50 percent of legacy debt using proceeds from the capital raise, suppliers have yet to restore normal trading terms, continuing to limit stock availability across stores. To keep shelves stocked, OK has also turned to supplier-finance schemes where third-party financiers pay suppliers if the retailer misses payment deadlines, leaving OK owing the financiers instead. The company has further secured new banking facilities. “US$19,6 million in banking facilities have been secured, with US$12,3 million still undrawn at approval,” the company said. “Four key relationship banks have provided formal letters of support [subject to normal conditions], reinforcing confidence in continued financial backing.”
As part of the turnaround plan, OK Zimbabwe has closed non-viable outlets, including Food Lover’s Market franchise stores, and now operates 62 strategically located stores. Management has intensified reviews of store profitability, staffing levels, rental commitments, and internal processes to align costs with current trading conditions. Workforce rationalisation was implemented during the period as the group sought to balance sustainability with the realities of a shrinking revenue base.
In light of the loss, the board resolved not to declare a dividend for the half-year. Nkala, before his departure, expressed the board’s and shareholders’ support for the turnaround efforts, noting that progress on property disposals was critical to restoring liquidity, rebuilding inventory, and stabilising operations. “With disciplined implementation of the restructuring and execution of the turnaround plan, the Group remains positive about returning to a sustainable growth path in the medium term,” he said.
However, the company remains technically insolvent, holding just 47 US cents for every dollar of short-term debt, down from 56 US cents in March. Nkala acknowledged that “Key constraints to recovery remain centred on liquidity needed for product procurement, limited stock availability due to short supplier terms, revenue levels that are still below break-even, and delays in realising property disposal proceeds.” The company’s future hinges on its ability to execute its turnaround plan, dispose of properties, and restore supplier confidence. The new board faces a monumental task in steering OK Zimbabwe back to profitability and stability.
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