By John Okoh
“Following approaches from various potential investors, and in line with our re-evaluation of the Group’s operating model in Nigeria, the Board has decided to initiate a formal process to consider the potential sale of all, or a majority stake, in Retail Supermarkets Nigeria Limited, a subsidiary of Shoprite International Limited. As such, 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.”
With that statement by Shoprite Holdings Limited, the shopping mall giant is closing its operations in Nigeria after 15 years operations. According to the South African company in an August 3 statement, titled “Operational and Voluntary Trading Update, 52 weeks ended 28 June, 2020”, its Nigerian operations had underperformed like other Supermarkets in Non-Republic of South African countries but with a poorer return. Though details on Nigeria are not disclosed fully, hyperinflation appears to be the major culprit as presented in the table below. Moreover, what it says about its home base in South Africa and other African countries provide more insight.
For South Africa, it says; “South African COVID-19 lockdown regulations implemented from 27 March 2020 restricted trade in several categories within our supermarket business and as such, impacted the business differently at different times. However, across the board, our Checkers, Checkers Hyper, Shoprite and Usave brands performed admirably in what can only be described as incredibly difficult conditions for both our employees and customers. The two weeks preceding South Africa’s initial 35 days of Level 5 lockdown resulted in elevated sales growth across all three of our supermarket brands but noteworthy was the significant growth reported by our repositioned mid-to-upper end Checkers (including Checkers Hyper) business which now represents 39.6% of Supermarkets RSA’s sales.”
For Supermarkets in other Africa countries, beside Nigeria, it says: “Given the aforementioned comment regarding the pending classification of Nigeria as a discontinued operation, Supermarkets Non-RSA (excluding Nigeria) contributing 11.6% to Group sales, recorded a decline in sales of 1.4% for the year.
“Second half constant currency sales growth of 6.3% was significantly impacted by lockdown regulations across the 14 African countries in which we trade. Lockdown restrictions pertaining to store closures; social distancing; transport restrictions; the movement of people; trading hours; workforce limitations and trade in alcohol impacted various regions to differing degrees at different times.”
Segmental sales growth for the twelve months to June 2020 is as follows:
|
Sales growth % |
H1 ended Dec 2019 |
H2 ended Jun 2020 |
FY 2020 |
|
Supermarkets RSA |
9.8 |
7.5 |
8.7 |
|
Supermarkets Non-RSA |
-2.7 |
0.1 |
-1.4 |
|
Furniture |
-2.7 |
-23.1 |
-11.9 |
|
Other operating segments |
4.4 |
3.5 |
3.9 |
|
Total continuing operating segments |
7.2 |
5.2 |
6.2 |
|
Discontinued operations (Nigeria operations) |
-5.9 |
-6.7 |
-6.3 |
|
Total operating segments including discontinued operations |
7.0 |
5.0 |
6.0 |
|
Total continuing consolidated operations* |
7.3 |
5.4 |
6.4 |
