Shoprite Closes Nigerian Business Unit Amid Dwindling Revenue
Shoprite, South African retail giant, on Monday announced it has commenced a formal process of shutting down its Nigerian business operations.
Shoprite Holdings Limited disclosed this in its operational and voluntary trading update released for the year ended June 28, 2020.
According to the company, the board decided to initiate a formal process to discontinue Nigerian operations or sell a major stake in Retail Supermarkets Nigeria Limited, a subsidiary of Shoprite International Limited, following approaches from investors interested in the Nigerian business unit.
“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,” Shoprite stated.
However, a look into the company’s financial statement showed the Nigerian business unit posted 5.9 percent decline in sales for the first half of the year ended December 2019 while sales of the unit declined by 6.7 percent in the second half of the year ended June 2020 to bring its total decline for the year to 6.3 percent.
While the South Africa business unit returned 9.8 percent growth in the first half of the same year and another 7.5 percent in the second half of the year to hit 8.7 percent year-on-year.
Other non-South Africa business units returned combined -1.4 percent year-on-year growth, compared to Nigeria’s -6.3 percent. Also, currency devaluation weighed on the profitability of the Nigerian unit. For instance, Nigerian Naira depreciated by 12.3 percent during the period while Zambia Kwacha appreciated bu 15.7 percent, Mozambique metical grew by 3.8 percent and Angola Kwanza depreciated by just 1.2 percent.
See the complete statement from Shoprite Holdings.
While investors might have approached Shoprite for Nigerian operations, lack of profitability amid falling revenue sales and challenging business environment compared to other operating Africa’s nations led to the decision to formally pulled out of Africa’s largest economy, Nigeria.
