Monday, August 03, 2020

Shoprite: Real reason we're vacating Nigerian market - ITREALMS

ITREALMS:
The Shoprite Holdings Limited has conclude plans to vacate Nigeria due to downturn in business performance occasioned by COVID-19 and hyperinflation, reports ITREALMS.

These, 
ITREALMS gathered were the real reasons adduced by the company in its “Operational and Voluntary Trading Update (52 Weeks Ended 28 June 2020) for declaring Nigeria's operations insolvent.

Shoprite Group of Companies, is Africa's largest food retailer founded in South Africa, by billionaire Christo Wiese in 1979 and has since operates over 2,934 outlets across 15 countries including Nigeria on the continent and Indian Ocean Island, with head office in Brackenfell in the Western Cape province of South Africa. Shoprite subsidiaries include Checkers, Computicket (Pty) Ltd.

According to the “Operational and Voluntary Trading Update (52 Weeks Ended 28 June 2020) report available to 
ITREALMS on Monday and endorsed in Cape Town, August 3, 2020 by the Chief Executive Officer, Pieter Engelbrecht, Chief Financial Officer, Anton de Bruyn, Corporate Affairs and Communications, Adele Lambrechts, and Investor relations chief, Natasha Moolman, decried poor performance in Nigeria without any option than to vacate the market in this most populous African country.

The trading update sponsored by Nedbank Corporate and Investment Banking, showed that Nigerian market it opened in 2005 is no longer favour.

The company, trading in Nigeria as “Retail Supermarkets Nigeria Limited,” 
ITREALMS gathered, opened in Lagos in December 2005, and has since expanded into seven states and the Federal Capital Territory (FCT), Abuja with its outlets.

Shoprite stated that “Despite difficult circumstances, in a year incorporating the COVID-19 lockdown and accompanying regulations governing trade, transport and operations, the Group increased total sale of merchandise for the 52 weeks to 28 June 2020 (including the impact of hyperinflation in the prior year) by 6.4 per cent to approximately R156.9 billion. Like-for-like growth for the year was 4.4 per cent.

As such, “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.

Thus, “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.”
ITREALMS gathered that this voluntary trading update became important in order to assess the impact of the impairments raised and the aforementioned COVID-19 costs on the group’s results for the year.

“Furthermore, due to the potential classification of our Nigerian business as a discontinued operation, we present continuing operations excluding Nigeria as an alternative,” part of the update read, stressing that they have excluded the after tax effect of exchange rate gains or losses and the impact of hyperinflation.

“In addition, “we have calculated this metric to exclude once-off COVID-19 costs.”

Chuks Egbune/DoP

No comments: