Johannesburg - Dual-listed retail group Choppies wants to be the market leader in southern Africa in the short term, before taking on bigger projects on the rest of the African continent.
The company yesterday announced that it had acquired 10 more stores in Zambia and was looking to Kenya to grow its market hold.
Read: Choppies expands in Zimbabwe
Chief executive Ram Ottapathu said Choppies was on track to reach 200 stores by the end of 2016. He said that during the year Choppies had expanded its footprint with a number of store roll-outs in existing markets.
Choppies has 40 stores in South Africa, including the 21 Jwayelani stores it acquired in KwaZulu-Natal and the Eastern Cape last year.
“Trading conditions in the region were very challenging, especially in mining towns. Rising power costs also negatively impacted profitability. Collectively these factors resulted in Choppies falling behind on its profitability forecasts,” he said.
Choppies’ revenue for the six months to December climbed by 17 percent to 3.5 billion pula (R4.8bn) at group level from 3bn pula in the previous comparable period, while operating income rose 14.16 percent to 747.27 million pula, up from 654.56m pula. Gross profit increased by 11 percent to 713m pula and earnings before interest, tax, depreciation and amortisation was up 5 percent to 216m pula.
However, the company’s earnings per share slowed down 6 percent to 8.08 thebe (cents) from 8.57 thebe, and headline earnings per share was also down 18 percent to 6.84 thebe from 8.37 thebe for the six months to end December.
“Our results were affected by the slowdown in the economy, but we are satisfied given the conditions we operated under in the last six months. We know economic conditions won’t remain depressed forever and we are going to capitalise when the trading conditions improve,” Ottapathu said.
Choppies currently operates in four countries; Botswana, where it has a 36 percent market share, South Africa, Zimbabwe, and one store in Zambia, which was opened in December 2015. The group is listed on both the Botswana and Johannesburg stock exchanges and specialises in bakery, fresh fruit and vegetables, butchery and takeaway in 147 stores.
Choppies shares were down 1.44 percent on the JSE yesterday to close at R5.48.
Chito Siame, an equity analyst at Mergence Investment Managers said: “Choppies has been on the fringes of South Africa in the platinum belt.”
BUSINESS REPORT