OK Zimbabwe Limited shareholders yesterday approved a hybrid turnaround plan meant to reboot the giant retailer, which entails a US$20 million rights offer and the sale of some immovable assets to generate an additional US$10,4 million.

The country’s largest retailer is facing significant operational and financial challenges due to a combination of factors, including supply chain disruptions, general economic challenges and high operating costs.

Amid the operational and financial challenges, the supermarket chain announced plans to close some of its branches, including Robson Manyika, in Harare’s Central Business District, Glen Norah, Kuwadzana, Mbare, and Chitungwiza, as well as Food Lovers Borrowdale and Avondale, also in the capital.

During the company’s extraordinary general meeting (EGM) yesterday morning, OK shareholders also approved a reconfiguration of the board and leadership transition plan.

The new board is expected to come in with revamped oversight and governance capacity.

Group chairman, Mr Herbert Nkala, told the EGM that the rights offer will be underwritten by key shareholders, namely National Social Security Authority (Nssa), as the lead underwriter, and Datvest Nominees and Old Mutual Life Assurance Company, as sub-underwriters.

Collectively, the three major shareholders hold 48 percent of the company’s ordinary shares.
“Proceeds from these initiatives will be used to restock stores, repay overdue creditors, restructure the store network, modernise operations, and invest in new technologies.

“These measures aim not only to stabilise the company but also to restore its position as a leading retailer by revitalising its customer value proposition, rebuilding supply trust, and safeguarding against judicial asset recovery,” Mr Nkala said.

The shareholders approved the US$20 million renounceable rights offer comprising 1 834 982 573 new ordinary shares at a subscription price of US$0,0109 for each, payable in full in US dollars, on the basis of 1,37 rights offer shares for every 1 OK Zimbabwe ordinary share already held at the record date of July 21, 2025.

Mr Nkala highlighted that some of the immovable properties owned by the company to be disposed of include a vacant commercial stand along Liberation Legacy Way, Borrowdale; a warehouse on Birmingham Road, Workington; OK Mbuya Nehanda, Harare; OK Gweru; OK Glen View; OK Malvern, Waterfalls, Harare; and a vacant commercial stand along Harare-Masvingo Highway, Southlea Park, Harare.

He also noted that the current executive management, comprising seasoned former executives who were brought back to stabilise the company, will remain in place until the end of the current financial year.

“A new substantive executive management team will be appointed to succeed them, with a mandate to implement the strategy with operational rigour and strategic foresight,” he said.

According to a circular published before the EGM, the rights offer and asset realisation initiatives are not standalone actions but integral pillars of a bold, coordinated transformation agenda.

The circular noted that the company was entering a transformative period underpinned by a clearly defined turnaround strategy aimed at restoring financial strength, operational efficiency, and long-term shareholder value.

The company noted that it will realign its operations with market trends by reassessing its brand segmentation, launching digital platforms such as OKShopEasy.com, and closing or divesting from under-performing stores and non-core investments.

OK held a special board meeting before its EGM where management provided a candid appraisal of the company’s financial health and ongoing efforts to stem losses and reboot operations.

Despite success in significantly reducing monthly costs from US$6,9 million to US$4,4 million, the retail giant remains in a loss-making position, two people who attended the meeting said.

A major contributing factor to these persistent losses, according to management, is the cost of rentals.
This company has seen its monthly rental burden jump from two percent of turnover to a base rent of three percent of sales, a substantial increase that is proving unsustainable given the thin margins in the retail sector.

In response, management informed the board of plans to renegotiate rental payment formulas with landlords to better align with the business’s financial realities.

Simultaneously, the company is engaging with some creditors to establish payment plans for outstanding debts.
Another area of significant concern raised during the meeting was the dire state of the group’s financial records.

Management disclosed a severe lack of proper reconciliation and instances of “wanton transfers” of experienced staff within the finance department.

This critical issue, previously brought to the attention of the former management, had reportedly gone unaddressed. OK is grappling with significant outstanding creditor balances, particularly in US dollars, and is struggling to meet its financial obligations to suppliers, resulting in huge stockouts across most outlets.

On a more optimistic note, OK anticipates improved restocking levels starting August 4 when the company begins to utilise funds from the rights issue.

Fifty percent of these funds are earmarked for debt repayments. When the new management took over, the company’s debt stood at approximately US$30 million.

However, this figure has since grown, exacerbated by the retail chain’s inability to meet other commitments, including mounting rental arrears. – Herald