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Shoprite will leave Nigeria and here is why

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Shoprite will leave Nigeria and here is why

The COVID-19 pandemic and the re-evaluation of the group’s Nigerian operating model means Shoprite is leaving town.

After 15 years, Africa’s largest grocery retailer and the South African store chain, Shoprite, is leaving Nigeria — the most populated nation in Africa and the largest market—.

Shoprite is re-evaluating its African business model, despite logistical issues and the novel coronavirus pandemic.

A drop in Nigerian revenue means it’s closing down shop now.

“In line with our re-evaluation of the group’s operating model, the Board agreed in Nigeria to initiate a formal process to explore the possible sale of all or a majority interest in Retail Supermarkets Nigeria Limited , a subsidiary of Shoprite International Limited, following approaches from various potential investors,” the company said in a statement.

“So, as Shoprite publishes its results for the year, Retail Supermarkets Nigeria Limited will be listed as a discontinued service. Any more updates will be made available to the market in due time.

Shoprite Holdings announced a decrease in annual earnings, hurt over the year by an impairment charge that it registered.

The retailer headquartered in Cape Town has launched a systematic process of selling all or a majority stake in their Nigeria supermarkets.

Global supermarkets (excluding Nigeria) contributed 11.6 percent to group revenue, with revenue down 1.4 percent from 2018.

South African retailers failed in the market in Nigeria. Mr Price also left the Nigerian market after Truworths pulled out.

Nairametrics announced in April that Nigeria’s Shoprite Holdings lost 8.1 per cent of its revenue in constant currency terms at the end of the second half (H2) of 2019 due to the xenophobic attacks and reprisals back in Nigeria in September.

Shoprite’s Chief Executive Officer, Pieter Engelbrecht, says: “We remain committed to continental operations but are constraining future expansion as we review our options for alternative operating models.

“Nonetheless, we have taken a variety of immediate operational steps, all of which are continuing and include decreases in leases, closures of storehouses, increases in efficiency and cost de-dollarization.

“In the absence of further devaluations of the currency and other unexpected conditions, we are optimistic that such operational steps would have a beneficial impact on profitability.

With ongoing determination, the Group enters the second half with a forward look.

“Our technical innovation gives us greater exposure and contributes to stronger business decision-making.

That, along with the introduction of our Xtra Savings Rewards Programme, is important to the Group and bodes well for a Shoprite in the future.

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