With South Africa’s economic showdown taking its toll on commercial property and mall owners, Botswana’s budget retailer Choppies Enterprises has announced plans of exiting the South African market, a few years after expanding into the country
The company, whose stock is currently suspended from trading on its primary bourse in Botswana as well as on the Johannesburg stock exchange, operates 88 stores in South Africa.
“Exiting the South African market is the appropriate strategic decision for the company,” it said in a statement after completing a strategic review of its business.
“Choppies has commenced a process which may result in the divestment of Choppies Supermarkets SA (Pty) Ltd in whole or in part.”
Choppies, which operates in eight African countries, saw its shares plunge by more than 60% last September after announcing a delay to the publication of its financial statements.
The results were delayed after the company’s external auditors PricewaterhouseCoopers (PwC) raised concerns with the board in respect of the audit for the year ended June 30, 2018.
South Africa’s economy is struggling for momentum. Although retail sales rose in June, data on Wednesday showed, the economy shrank in the first quarter, and data last month showed unemployment at its highest in over a decade.
The company in May announced the suspension of its CEO, Ramachandran Ottapathu, amid a forensic probe into the company’s business dealings. A summary of the investigation conducted by PwC established a number of irregularities inventory records and bulk sales.
New recapitalisation plan in Kenya
Choppies has clinched a deal with local shareholders in Kenya to bailout the retailer and settle part of its supplier debt estimated at US$6 million (Sh600 million) as it looks to restock its stores.
Choppies says that the Export Trading Group (ETG), its local shareholder with a 25 percent stake, has come up with a recapitalisation plan that will help restock its shelves as suppliers get their cash in three tranches.
In the deal inked between Choppies and the Association of Kenya Suppliers (AKS), the retailer will release 50 percent of cash owed to creditors who sign the agreement on condition that supply is resumed.