Choppies records first profitable year in five years as restructuring pays off

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Choppies stores yesterday opened its doors in Kumalo.
  • Swings from a BWP 370.6m loss in 2020 to BWP 59.6m in fiscal year 2021
  • Revenue from rest of Africa operations increased by 2.2% driven by inflationary increases in Zimbabwe and Zambia
  • Group revenue down 1.7% to BWP 5,331m
  • Total operating costs were reduced by 7.2%

Botswana retail giant, Choppies Enterprises turned its first annual profit since 2016 as the benefits from restructuring the business following the exit from underperforming investments continue to be realized.

The Group reported a profit of 59.6 million Botswana pula in the full-year ended 30 June 2021, swinging from BWP 370.6 million loss recorded in fiscal 2020.

The retail operator which targets lower to middle-income shoppers announced in August 2020 that it is exiting South Africa, Kenya, Tanzania and Mozambique after having suffered running shortfalls that contributed to some huge losses, including the BWP 139 million loss for the half-year ended December 31, 2019.

It used to operate close to 125 outlets in southern Africa, 72 stores in Botswana and 35 in South Africa and earlier indicated plans to increase branch network in Zimbabwe to 50.

The Group’s rest of Africa revenue increased by 2.2% to BWP 1,186 million from BWP 1,160 million in 2020 driven by inflationary increases in Zimbabwe and Zambia which were further offset by negative fluctuations in currency exchange rates.

Cumulatively, the Group saw a 1.7% decline in revenue to BWP 5,331 million from BWP 5,421 million mainly attributed to negative volume growth in Botswana due to the impact of the COVID-19 pandemic on the economy and consumer spend.

Meanwhile, profit for the period from continuing operations declined by 17% to BWP 82 million from BWP 99 million recorded in the previous year while basic earnings per share at 6.5 thebe were down 20% from 8.1 thebe the previous year.

Net cash flows generated from operating activities increased by 197% to BWP 359 million from BWP 162 million in 2020.

Total operating costs were reduced by 7.2% resulting in an 8.7% increase in Earnings Before Interest and Taxes (EBIT) from BWP 208,0 million to BWP 226,2 million. EBIT margins improved from 3,8% to 4,2%.

“The increase in the effective tax rate is primarily due to last year’s losses related to the divestiture of the South African operations sold in 2020,” the Group said.

“The Group has managed its cash resources and liquidity prudently over the course of the COVID-19 crisis with a reduction of BWP 55.4 million in net debt, including the debt disclosed in 2020 under discontinued operations.”

The Group’s total assets for the period under review decreased by 7% to BWP 1,703 million compared to BWP 1,840 million in the fiscal year 2020.

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