Devaluation of naira and lower sales resulting especially from anti-xenophobic attacks on its shops may have forced the decision of Shoprite to exit the Nigerian market.
The South African group with 25 stores across eight states in the federation including the Federal Capital Territory, had on Tuesday announced it plan to exit the Nigerian market by getting suitable local investors.
The company in three of its recent reports hinted at the difficulties it was experiencing in Nigeria, citing low sales and currency devaluation.
Xenophobic attacks on foreigners in South Africa, especially blacks, in September 2019 had resulted in reprisals attacks on Shoprite outlets in Nigeria.
This subsequently resulted in lower sale figures in country as acknowledged by the retail chain group in its latest operational results.
The company also decried the impact of the devaluation of the naira on its business in the report.
The Central Bank of Nigeria has technically been devaluing the naira as the market had continued to defy its interventions.
Shoprite in its ‘Unaudited results for the 26 weeks to 29 December 2019’ stated: “With regards to Nigeria, the impact of store closures and subsequent reduction in customer count, both during and after the September Xenophobic attacks, resulted in a difficult half with sales declining by 8.1 per cent in constant currency terms.
“Zambia is performing well with sales in constant currency growing by 14.7 per cent.
“Since the first store opened in Kenya during December 2018, additional three stores have been opened.”
Shoprite had earlier in its ‘Operational update for the quarter ending September 2019’ stated: “The supermarkets non-RSA segment has seen no change to the difficult operating environment articulated in our recent results.
“Currency devaluations have continued and our Nigerian business had a particularly challenging quarter marred by xenophobic attacks.
“Overall our supermarkets non-RSA segment’s sales declined 4.9 per cent.
“Management is assessing the performance of the supermarkets non-RSA segment, with specific reference to the group’s return on capital invested in Africa.”
In its latest report on Nigeria titled ‘Operational and voluntary trading update (52 weeks ended 28 June 2020)’, the group from its head office in South Africa expressed its intention to exit the Nigeria market.
It stated, “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.”
The group said Retail Supermarkets Nigeria Limited may be classified as a discontinued operation when Shoprite reports its results for the year.
(PUNCH)
NOTICE: For Any Broken Link, kindly use the Comment session box to report and it will be resolve shortly
