Shopping carts stand parked outside the entrance to a Shoprite Holdings Ltd. store in Johannesburg, South Africa, on Friday, Aug. 12, 2011. Christo Wiese, whose net worth is an estimated $1.6 billion according to Forbes Magazine, controls Shoprite Holdings Ltd., Africa's largest grocer, and holds more than a third of Brait SA, the biggest South African private equity company. Photographer: Nadine Hutton/Bloomberg via Getty Images
Shoprite set to exit Nigeria, blames current decline on Covid-19 pandemic
Following dwindling profits occasioned by unfavorable business climate, ShopRite Holdings Limited, operators of South Africa’s retail giant, Shoprite International Limited, has announced the commencement of a formal process to disengage from Nigeria.
In its operational and voluntary trading update for the year ended June 28, 2020 released recently, the South African retailer says it will consider the potential sale of the majority stake of its Nigerian holdings, Retail Supermarkets Nigeria Limited.
The retail shop follows on the heels of two other South African Ventures, Mr. Price and Woodworths to announce it’s exit from Nigeria market.
The multi-national retail group, which announced a 6.4 per cent increase (R156.9billion) in total sales of merchandise for the outgoing year despite the challenges posed by the COVID-19 pandemic, said the decision to discontinue its Nigeria operation was a result of “following approaches from various potential investors, and in line with our re-evaluation of the group’s operating model in Nigeria.”
“The board has decided to initiate a formal process to consider the potential sale of all, or a majority stake, in Retail Supermarkets Nigeria Limited, a subsidiary of Shoprite International Limited. As such, Retail Supermarkets Nigeria Limited may be classified as a discontinued operation when Shoprite reports its results for the year. Any further updates will be provided to the market at the appropriate time,” the report stated.
While the company’s total sales of merchandise may be on the rise, it is struggling outside South Africa. According to the report, the non-South Africa supermarket operation of the company, excluding Nigeria, contributed a paltry 11.6 per cent to the group sales. Its non-South Africa sales also declined by 1.4 per cent in the year under review. The company blamed this decline on the lockdown announced in several African countries due to the coronavirus pandemic.
“Second half constant currency sales growth of 6.3% was significantly impacted by lockdown regulations across the 14 African countries in which we trade. Lockdown restrictions pertaining to store closures, social distancing, transport restrictions, the movement of people, trading hours, workforce limitations and trade in alcohol impacted various regions to differing degrees at different times.”
Due to continued downward slide in Nigeria economy the South African retailer has been struggling in recent times. In H2 of 2019, Shoprite Nigeria reported a loss of 8.1% of sales which was related to the September 2019 xenophobic attacks.
Mr. Price, another South African outfit also closed 4 out of its 5 Nigerian retail outlets.
Shoprite opened its first store in Nigeria in December 2005 and now has a total of 26 stores across eight states in the country, including Federal Capital Territory, Abuja. The company also claims to have employed more than 2,000 people in Nigeria, of which 99 per cent of them are Nigerians.
RECOMMENDED ARTICLES
Comment
No comments found.