KENYA – Botswana based retailer, Choppies supermarket has closed its third outlet in Nanyuki, following its prior closure of its Kiambu and Bungoma outlets this year as the firm experienced stock outs amid static fixed costs of running on empty shelves.
This is in line with the retailers plans of exiting the Kenyan market as revealed in an extraordinary general meeting (EGM) with its shareholders, classifing its 12 stores as distressed.
Following Choppies recent branch closure, the Kenyan retailer Tuskys has taken over Nanyuki Mall as anchor tenant.
“Choppies enterprises have agreed to vacate the premises to give way to Tuskys supermarket. Tuskys will move in by the end of October,” Ms Joan Kibui of Nanyuki Mall Limited said in a notice to tenants.
The retailer had stores in major towns including Kisumu, Nakuru, Kisii and Kericho, but the heavy stockouts have hit its business hard forcing it to make some hard decisions.
It sent home over 200 workers in early September days after it emerged that it plans to exit the Kenyan market.
Choppies troubles started after the retailer was suspended from trading at the Johannesburg and Botswana stocks exchanges in November 2018 on account of the company’s auditors PwC’s inability to finalise the 2018 financial statements due to certain irregularities.
This led to the undertaking of a forensic investigation of which the report was released in September highlight alleged questionable dealings involving its suspended Chief Executive Officer, Ramachandran Ottapath.
These include accounting irregularities around bulk sales and inventory at its stores in SA and Zimbabwe, and store acquisitions in SA.
The board of the Botswana based retailer recently met and a faction led by former President of Botswana Festus Mogae wanted the retailer to pull out of Kenya and South Africa reports Business Daily.
“Zambia has a steady performance in a volatile economy, Kenya’s distressed business has been identified for disposal. Tanzania and Mozambique are distressed while Namibia is performing as expected,” Wilfred Mpai, Choppies director told shareholders.
“In Botswana there is steady income flow under difficult trading circumstances. South Africa North West business is distressed and identified for disposal,” he added.
The retailer made an entry into the Kenyan market in June 2015 by buying stake in Ukwala supermarkets.
Choppies bought the majority stake for Sh1 billion (US$10m) and entered into a joint venture with Parin Bharatkumar Patel and Birju Pradipkumar Patel, the two directors of the Export Trading Group (ETG) who also owned Ukwala Supermarkets.