Choppies has announced plans to sell six of its 15 stores in Kenya. Kenya’s highly competitive retail market has left a dent in its revenue. Choppies this year closed the shutters of outlets in Kiambu, Nanyuki and Bungoma due to stock-outs amid rising operational costs.
The Kenyan unit of Choppies will have to write off Sh1.6 billion. In 2018, the company posted a loss of Sh248.7 million, 2018. According to the report, its inability to access loans led to stock-outs in the Kenya operation. The firm’s shares have been suspended on both the Johannesburg and Botswana stock exchanges since November 1, 2018.The reason was the inability of the company’s auditors, PwC’s, to finalise the 2018 financial statements due to irregularities. The delayed accounts were released last week.
Four years back, Choppies bought a 75 percent stake in Ukwala Supermarket for Sh1 billion as a business strategy to enter East Africa. The balance shares are held by local shareholders — the Export Trading Group (ETG). To bailout Choppies from the cash crunch, ETG recently offered the Kenyan unit of Choppies Sh400 million as shareholder loan to settle supplier debts that had restricted fresh stocks. The local shareholders also guaranteed a Sh250 million overdraft from I&M Bank Limited in debt deals. Choppies has recently been relying on loans, including a Sh300 million facilities from Barclays Bank of Kenya. The company reported that it has received Offers for two stores and initial negotiations are already on for the other stores. Choppies also faced internal troubles after its CEO, Ramachandran Ottapathu, was reinstated despite his suspension in May on accusations of malpractices.
The Botswana retailer operates more than 130 stores in its core markets, South Africa and Zimbabwe. Some more retailers who are not performing well are also mulling the option of retreating. .Fashion retailer TFG last month reported that it would decide next year whether to continue trading in Kenya and Ghana. The retailer has at least six stores in each market.
