Retail giant, Choppies Enterprises Limited continues to increase its footprint with store rollouts in its existing markets across sub‐Saharan Africa. The retailer announced this week that its rollout plans are progressing as anticipated, noting that its Zambian stores are ready to commence operations.
The operations in Zambia and Tanzania were due to commence by the middle of this year, but had been delayed by a few months.
Choppies plans to rollout a total of 35 new stores, excluding acquisitions, in the coming financial year in line with its target to have 200 stores by the end of the 2016 calendar year.
“In addition, our expansion in Kenya will help to spread our risk further and of course drive group‐level sales volume growth,” the retailer said in its results statement for their fiscal to June 2015.
While the company expects some pressure on sales, it said there are sufficient measures in place to protect its profit margins.
“Our expanding own brand range and cost containment thanks to improved logistical efficiencies will support margins across the region in the event of a weakening in the consumer environment,” read the statement.
According to the company, the move towards a breakeven position in South Africa was accomplished with additional 11 stores from 26. There was a single store closure in South Africa due to the relocation of the said store. The Zimbabwean expansion from Harare to the north of the country proceeded well with the addition of seven new stores to take the in‐country footprint to 20. Locally, the retailer further strengthened its position as the biggest retailer to 73 stores from 69 stores in the 2014 financial year.
Choppies acquired a 75 percent stake in 10 Ukwala Supermarkets in Kenya in May 2015. The transaction is in line with their strategy of expanding into new markets in sub‐Saharan Africa and gives Choppies an immediate footprint of established stores and a platform to grow in Kenya.
Three of the supermarkets are located in Nairobi, two in Nakuru and five in the port city of Kisumu, the third largest city in Kenya.
The finalisation of the acquisition is subject to approval by the Competition Authority in Kenya, which they expect to be granted by October 2015.
Meanwhile, when presenting the results in a teleconference, Choppies group chief executive officer, Ramachandran Ottapathu said during the financial year to June 2015, the group’s revenue increased to P5.9 billion, an increase of 19 percent from P5 billion. Gross profit increased by 20 percent to P1.3 billion from P1.1 billion in the previous year. “Profit after tax increased 11 percent to P197 million while earnings per share increased by 20 percent to 17.11 thebe and headlines earnings per share increased by 22 percent to 16.92 thebe,” the CEO said.
He noted that the 26 percent hike in administrative expenses to P817 million is associated with the once‐off cost of new store openings.
The CEO said plant and equipment increased to P746 million from P597 million due to the rollout of 24 new stores across the three markets, adding that cash and cash equivalents increased to P344 million from P103 million.
Ottapathu said the P448 million proceeds from the JSE listing was used to repay P118 million in long-term debt and prop up the cash position for further expansion. Long-term borrowings increased to P353 million from P276 million to fund capital expenditure while net cash flow for the financial year was P223 million.