South Africa’s Shoprite Holdings Ltd posted $10.27 million gain from the sale of its assets in Uganda, Madagascar and Nigeria as Africa’s largest fast-moving consumer goods retailer retreated from markets it has considered under-performing on the continent.
This comes as the group made a provision of $87.89 million on loss-making stores outside South Africa during the 53-week period ended July 4, 2021, while its net debt increased by four percent to $1.77 billion from $1.7 billion.
The retailer, which is listed on the Johannesburg Stock Exchange (JSE) and cross-listed on the Namibian and Zambian Stock exchanges, revealed through its financial statements for the 53 weeks ended July 4 that its operations in Uganda and Madagascar which it had classified as “assets held for sale” yielded a combined net gain of $8.85 million, but declined to disclose the value for each transaction.
On the other hand, the sale of the Nigerian subsidiary, which was completed in May 23 realised a net gain of $1.41 million after the business was sold at $35.89 million of which $29.81 million of the amount has already been received.
The retailer noted that its operations outside South Africa consisting of 14 countries only contributes 20 percent of the firm’s profitability with a huge 80 percent of the earnings coming from South Africa.
As a result it closed its Mauritius business in 2019 due to continued non-profitability. Uganda and Madagascar operations made net losses of $1.41 million and $540,865 respectively during the financial year ended July 4.
Its Kenyan subsidiary, whose last store was closed in January, made a net profit of $676,081 during the period under review.
According to the retailer Kenya had three stores, Madagascar 10, Nigeria 25 and Uganda had five.
Shoprite exited Tanzania in 2014 by selling two of its branches in Dar es Salaam and one in Arusha to the then regional retailing giant Nakumatt Holdings. It is argued that Shoprite’s business, particularly in Africa, has been disrupted by technology as some shoppers have now moved to online operations.
On the other hand Botswana-based retailer Choppies Enterprises Ltd (CEL) discontinued its operations in Tanzania and Kenya last year to curb financial losses amid stiff competition in the retail space.
Choppies, which is listed on the Botswana Stock Exchange (BSE) and cross-listed on Johannesburg Stock Exchange (JSE) discontinued operations in four countries — Kenya, Tanzania, Mozambique and South Africa.The South African business was sold off at a loss of $8.2 million in […]