SOUTH AFRICA – South African-based supermarket chain Shoprite has pulled the plug on its operations in Kenya as it continues with its plans to exit non-performing operations out of its South African base due to poor performance.
The retail company, which reported that the group’s sales of merchandise rose by 6.4% to a record R156.9 billion (US$9.2bn) for the year ended June 2020 despite the Covid-19 upsets, moves out of Kenya after recently doing the same in Nigeria, Africa’s largest potential market.
In the year under review, the company says that despite the significant COVID-19 lockdown restrictions impacting it to varying degrees, its core Supermarkets Republic of South Africa (RSA) operating segment increased sales by 8.7%, representing a R9.8 billion (US$577m) increase to R122.4 billion (US$7.2bn).
The retailer’s core supermarkets include its Shoprite, Usave, Checkers and Checkers Hyper brands.
On the other hand, its Non-RSA outlets continuing operations’ sales declined by 1.4% in rand terms, however, it increased by 6.6% in constant currency terms.
“Overall, it has been a difficult six months for Supermarkets Non-RSA given lockdown regulations which impacted store openings, days and hours of trade, as well as severely restricting transport in some countries, impeding our employees and customers’ ability to get to our stores,” said Shoprite Group CEO, Pieter Engelbrecht.
The company headquartered in South Africa, reported a 2.3% volume growth in the home market, coupled with 16 months of consecutive market share gains up to and including June 2020.
Excluding the impact of hyperinflation, trading profit increased by 10.4% to R8.3 billion (US$488.9m) while its diluted headline earnings per share (DHEPS) increased by 2.5% to 765.8 cents from 746.9 cents of 2019.
“Overall, it has been a difficult six months for Supermarkets Non-RSA given lockdown regulations which impacted store openings, days and hours of trade, as well as severely restricting transport in some countries, impeding our employees and customers’ ability to get to our stores,”Shoprite Group CEO – Pieter Engelbrecht.
The group indicated that it is still embarking on a process to consider the sale of either a majority stake or the entire shareholding in its Nigerian subsidiary , following its announcement recently of its plans to exit the country.
Retailer exits Kenya
In addition to that, Shoprite is ending dalliance with Kenya as it plans to close or dispose of its remaining two stores in the country, leaving the East African nation barely two years after it opened its first outlet.
The supermarket chain has been reviewing its long-term options in Africa as currency devaluations, supply issues and low consumer spending in Angola, Nigeria and Zambia have weighed on earnings.
“Kenya has continued to underperform relative to our return requirements,” the retailer said, adding its decision to leave had been confirmed by the economic impact of Covid-19.
Shoprite opened its first supermarket in Kenya at Westgate Mall, Nairobi in December 2018, hoping to take advantage of disarray in Kenya’s grocery sector after the collapse of Uchumi and Nakumatt Supermarkets.
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