Nigeria exit: Shoprite decries low patronage, devaluation
Naira devaluation and lower sales, especially as a result of the anti-xenophobic attacks on its shops may have influenced the initial report of Shoprite leaving Nigeria.
The South African group which has 25 stores across eight states in the nation (including the Federal Capital Territory) reportedly announced its exit from the Nigerian market on Tuesday.
The company in three of its most recent reports had hinted some challenges it was experiencing in the country, which includes currency devaluation and low sales.
Xenophobic attacks on foreigners in South Africa, especially Nigerians, in September 2019 had resulted on attacks in Shoprite outlets in Nigeria in the act of retaliation.
The incident had ultimately led to lower sale figures in the country, as indicated by the retail company in its recent operational results.
The company also highlighted the impact of the naira devaluation on its business in the report. The Central Bank of Nigeria recently has been technically devaluing the Nigeria naira as the market continues to defy its interventions.
Shoprite stated in its 'unaudited results for the 26 weeks to 29 December 2019' that:
"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 2018, additional three stores have been opened".
Also, in its 'Operational update for the quarter ending September 2019', Shoprite stated;
Naira devaluation and low sales is likely to push Shoprite out of the Nigerian market
"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 by 4.9 per cent.
"Management is assessing the performance of the supermarkets in non-RSA segment, with specific reference to the group's return on capital invested in Africa.
In its recent report on Nigeria which was titled, "Operational and voluntary trading update (52 weeks ended 28 June 2020), the group through its head office in South Africa expressed its intention to leave the Nigeria market.
Shoprite Holdings Ltd Operational and voluntary trading update (52 weeks ended 28 June 2020) page 1
A part of it reads, "Following approaches from various potential investors, and in line with our re-evaluation of the group's operation model in Nigeria, the board has decided to initiate a formal process to consider the potential sale of all, or majority stake in Retail Supermarkets Nigeria Limited, a subsidiary of Shoprite International Limited".
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