BOTSWANA – Retail giant, Choppies supermarket, ended the year 2015 on a high note after its revenue went up by 17 percent to P 3.5 billion for the half-year to December 2015.
According to the financial statement posted on the Botswana Stock Exchange (BSE) website this week, gross profit went up by 11 percent to P714 million.
The company also managed to increase its footprint locally and beyond after increasing the total number of stores from 18 to 147 during the period while the total retail space increased by 22.19 percent to 214,052 sqm.
According to the company, Botswana contributed 64 percent to group revenue.
“The sharp devaluation of the Rand continued in the current financial year, putting pressure on Pula-based sales prices. However, profitability continued to improve from the scale benefits of our mature infrastructure. We expect this process to continue going forward,” said the company.
In South Africa, the company said trading conditions in the region were challenging, especially in mining towns.
“Rising power costs also negatively impacted profitability. Collectively these factors resulted in Choppies falling behind its profitability forecasts. Downward shifts in consumption patterns negatively impacted gross profit margins in all of our markets, including South Africa,” the company said in the statement.
However Choppies opened four new stores during the half-year in neighbouring South Africa, taking total stores to 40.
“Choppies’ plans to achieve significant scale in South Africa have been greatly enhanced by the acquisition, after 31 December 2015, of 21 Jwayaleni stores in KwaZulu-Natal and Eastern Cape,” read part of the statement.
These stores, which are currently operating under the “Jwayelani” brand, generated revenues of over R1 billion in the year to August 2015 with a gross profit margin of 20.37 percent and profit before tax margin of 2.84 percent for that period.
“The unaudited management accounts show Jwayelani’s gross profit grew by 8.93 percent in the same period. This acquisition creates a platform for profitable growth in the South African operations,” said the company.
On the other hand, Choppies was impressed by the Zimbabwe market, which achieved revenue growth of 49 percent over the first six months of the previous financial year.
However the company said an aggressive pricing and promotions strategy in new stores negatively impacted profitability, and start-up costs for the eight new stores opened during the period.
“Macroeconomic pressures in Zimbabwe continue to affect the spending power of consumers. In addition, deflationary trends have continued due to the strength of the US Dollar,” said the company.
Operations in Zambia commenced on 25 November, 2015 with 1192 sqm store at Tafika Commercial Complex, Kanyama, Lusaka and a distribution centre in Makeni, Lusaka.
The company is planning a further 10 stores during calendar year 2016.
On the local market the company expanded through the addition of its 79th store, which started operation in Gabane on 4th March 2016. The retail giant is expecting to open a further two stores before the end of the current financial year.
It also said that a deal has been concluded in Kenya under which 10 existing stores will be taken over during the next few months.
“This operation commenced on 13 February, 2016 with the takeover of first store in Kisumu and, to date, a further 3 stores have been taken over. The entire process is expected to be completed by end of March 2016,” said the company.
According to the company, no interim dividend has been declared and a final dividend will be declared and distributed after the finalisation of the financial statements for the year ended 30 June 2016