NIGERIA – South African retailer, Shoprite has announced that it is considering the sale of all of or a majority stake in its Nigerian subsidiary, Retail Supermarkets Nigeria Limited after reviewing its operating model and receiving approaches from various investors.
In its trading update for the 52 weeks to end June, Shoprite indicated that 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,” stated the company.
This is coming about 15 years after it opened its first store in Lagos in December 2005. Shoprite has over 25 stores across the country.
In addition, it marks a walking away from the country by yet another SA company, as it follows Tiger Brands, Woolworths and Mr Price.
Nigeria’s huge market potential has been damaged by currency devaluations, weakening oil prices and challenges from earnings in local currency but supplies paid in dollars.
In 2013 it considered expansion to 44 Shoprite stores in Nigeria, but halted the project after encountering multiple challenges in the West African country.
In 2019, the retailer faced lower consumer demand in Nigeria as locals boycotted SA brands to protest against xenophobic violence in SA.
The continent’s top supermarket has been reviewing its long-term options outside South Africa i.e in Kenya, Angola, Nigeria and Zambia.
Despite difficult circumstances, in a year incorporating the COVID-19 lockdown and accompanying regulations governing trade, transport and operations, the group increased total sale of merchandise for the 52 weeks to 28 June 2020 by 6.4% to approximately R156.9 billion (US$9m).
Like-for-like growth for the year was 4.4%.
Sales at its main market, South Africa (inclusive of liquor) grew by 8.7% underpinned by a strong second half in which sales grew 7.5%, notwithstanding a high second half base in the prior year during which fourth quarter sales grew by 9.4%.
As a result of lockdown in South Africa due to the COVID-19 outbreak, customer visits for the year declined by 7.4%, however, average basket spend increased by 18.4%.
Sales at its markets outside South Africa, excluding Nigeria, contributing 11.6% to Group sales, fell by 1.4%.
Its HEPS – the main profit measure in South Africa – were likely to be between 1.6% below and 6.4% above the 747.7 cents it reported a year earlier.
The Group plans to publish its 2020-year end results on September 8.
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