Choppies Enterprises Limited, Southern Africa’s largest grocery retailer outside of South Africa, continues to solidify its position as a retail giant despite navigating a complex economic environment.
With 306 stores across four countries, the Botswana-based company is reporting steady revenue and operational growth, driven by strategic acquisitions, expansions, and strong performance across all segments, except underperformance in Zimbabwe.
Choppies, dual-listed on the Botswana Stock Exchange (BSE) and Johannesburg Stock Exchange (JSE), operates in diverse sectors beyond food and general merchandise retailing. Its portfolio includes liquor sales, financial services, and manufacturing, supported by centralised distribution hubs across Southern Africa.
For the financial year ending June 2024, Choppies’ results were significantly boosted by the acquisition of Kamoso Group, although the challenging economic situation in Zimbabwe impacted overall results. Nevertheless, excluding the Kamoso acquisition, the Group’s performance remained strong.
Retail sales surged by 31.8 percent to P8.48 billion, up from P6.43 billion the previous year. This growth was fueled by the company’s organic expansion, with 14 new store openings, and the acquisition of 108 liquor and hardware stores from Kamoso Group. In contrast, Choppies rationalised its store portfolio by closing 15 underperforming stores, including 10 in the Kamoso segment.
On July 19, 2023, Choppies acquired a controlling 76 percent stake in the Kamoso Group, which operates in liquor retail, milling, hardware, and water bottling. The Botswana Development Corporation (BDC) retained a 24 percent stake. While the acquisition posed some challenges, it has already proven to enhance Choppies’ manufacturing capabilities and expand its market reach.
In just a short period, Kamoso’s performance has improved. Although the segment recorded a post-tax loss of P19 million, this marked a significant improvement from the previous year’s P39 million loss. Sales increased by 11 percent, signaling the potential for a continued turnaround. “We are pleased with Kamoso’s performance and are confident that this acquisition will be value-accretive for the group,” Choppies noted.
Sales and foot traffic in Kamoso’s liquor, hardware, and manufacturing divisions have surged. In the last six months leading to September 2024, sales grew by over 40 percent, while gross profit increased by more than 30 percent. Footfall increased by 8.9 percent for the financial year, with a 12.7 percent rise over the last six months. Choppies expects that the consolidation of Kamoso will create long-term value and enhance profitability.
Botswana, Choppies’ home base, continues to anchor the company’s operations. Sales in the country grew by 13.6 percent, with like-for-like sales increasing by 10.6 percent. Despite economic challenges, Choppies Botswana has demonstrated resilience, reporting sales of P5.08 billion, supported by 10.1 percent volume growth and 3.1 percent price inflation. EBITDA and adjusted EBITDA rose by 13.8 percent and 14.9 percent, respectively, as gross profit grew faster than costs.
One of the year’s highlights was the 20th Big Birthday Bonanza, an annual campaign that drew record customer engagement. This initiative, coupled with Choppies’ improved in-store execution and inventory management systems, boosted foot traffic and profitability.
Choppies Namibia has also been a bright spot, with sales growing by 39.1 percent and like-for-like sales increasing by 25.5 percent. As new stores in Namibia continue to mature, Choppies expects the profitability of this segment to grow. The company has also introduced an inventory optimisation system in Namibia, streamlining operations and improving gross profit margins.
In Zambia, despite the depreciation of the Zambian Kwacha, Choppies performed well, with sales in Pula terms growing by 14.9 percent, translating to 48.1 percent growth in Kwacha terms. Like-for-like sales also increased by 48 percent. Choppies managed to navigate through currency volatility, reporting a 27.5 percent increase in adjusted EBITDA in Kwacha terms.
Zimbabwe, however, remains a challenging market for Choppies. The introduction of the new ZiG currency in April 2024, replacing the Zimbabwean Dollar (ZWL), has yet to stabilise the economy. Consequently, Choppies Zimbabwe experienced a decline in footfall and profitability. The Group is reevaluating its operations in the country as the economic environment continues to strain overall performance.
Choppies’ financial management has remained strong despite challenges. The group reduced its non-IFRS 16 debt from P289 million last year to P287 million, even after taking on P190 million in net non-IFRS 16 debt from the Kamoso acquisition.
In a key milestone, Choppies declared its first dividend since 2017. An interim cash dividend of 1.6 thebe per share was paid on April 16, 2024, and the board has declared a final dividend of 1.4 thebe per share, payable on October 28, 2024. This brings the total dividend for the year to 3.0 thebe per ordinary share, a positive sign for shareholders.
