Like Nigeria, Shoprite Moves to Divest from Kenya

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Peter Uzoho with agency report
South Africa’s Shoprite Holdings yesterday said it expects to close or dispose of its remaining two stores in Kenya in the year ahead, leaving the East African country after opening its first store there more than two years ago.

The supermarket chain has been reviewing its long-term options in Africa as currency devaluations, supply issues and low consumer spending in Angola, Nigeria and Zambia have weighed on earnings.

“Kenya has continued to underperform relative to our return requirements,” Reuters quoted the retailer to have said, adding its decision to leave had been confirmed by the economic impact of COVID-19.

Shoprite opened its first supermarket in Kenya at Westgate Mall, Nairobi, in December 2018, hoping to take advantage of disarray in Kenya’s grocery sector after the collapse of Uchumi Supermarkets and Nakumatt, two of the country’s top three retailers.

The decision to leave comes a month after Shoprite said it was considering reducing or selling all of its stake in its Nigerian subsidiary.

Shoprite, with more than 2,300 stores across Africa, reported a 6.4 per cent rise in sales for the year ended June 28, with like-for-like sales up by 4.4 per cent as customers spent more on groceries at its discount Usave and mid-to-upper end Checkers stores.

Diluted headline earnings per share (HEPS), the main profit measure used in South Africa, from continuing operations rose to 765.8 cents against a restated figure of 746.9 cents a year earlier.

Last month, Shoprite Holdings disclosed unfolded plans to divest its stake in Nigeria.
The group, in a memo to its Nigerian employees dated July 31, 2020, that was signed by the General Manager, Shoprite Group of Companies, Carl Erickson, had stated that, “We have identified interested Nigerian investors that share in this vision and we will now explore various possibilities of making it a reality.”

It stated that the divestment move was to open the business to Nigerian investors.
“The expansion of the food retail business in Nigeria to a greater consumer market should remain everybody’s shared vision. It has, however, become apparent that the best manner in which to do this is by engaging Nigerian investors who share in this vision.

“In so doing, we will be creating a truly Nigerian business run and owned by Nigerians for the Nigerian market,” it had explained.