Choppies withdraws from African troublespots
Mbongeni Mguni | Friday March 27, 2020 17:23
In an update to shareholders last week, directors of the regional grocer said full withdrawals had been finalised in Mozambique and Tanzania.
“(In) Kenya, operations have since been scaled down to only two stores and negotiations are ongoing to sell equipment to local operators and/or existing landlords to clear some of the outstanding liabilities,” the group said in a notice to directors.
The latest developments meant Choppies’ African footprint outside Botswana is now limited to South Africa, Zambia, Zimbabwe and Namibia.
A deal to exit the group’s 88 stores in South Africa has received regulatory approval, with Choppies now finalising the extent of outstanding commitments with the proposed buyer.
The exits end a remarkable period of rapid pan-African expansion for Choppies, during which it grew from a single store in Lobatse in 1986, to its first store outside Botswana in Zeerust in 2008, to hundreds of stores spread over eight countries.
Critics panned the aggressive expansion, saying Choppies was committing itself to notoriously unstable countries where previous retailers, including South Africa’s Shoprite, had struggled to survive.
The homegrown group’s troubles came to the fore in 2017, with new auditors questioning historical finances, transactions, values and practices, leading to the launch of forensic and legal investigations into the group and its senior executives.
The Botswana Stock Exchange and Johannesburg Stock Exchange suspended Choppies in November 2018 after it failed to produce financial results for the year ended June 30. The regional grocer then underwent a tumultuous period, with a highly public boardroom fallout pitting non-executive directors against founders Ramachandran Ottapathu and Farouk Ismail.
Auditors, lenders and suppliers also made demands on the group, as speculation grew that previous financials were misstated and inherent misgovernance had been taking place. Ottapathu and Ismail prevailed over their detractors at a highly contentious extraordinary general meeting last September and with a reconstituted board and recapitalisation from their pockets, have sought to steady the ship. The African exits are expected to allow Choppies to focus its energies on better performing assets, as part of a strategy to regain momentum.