HomeBusinessPlatinum belt strikes hit Choppies revenue

Platinum belt strikes hit Choppies revenue

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BOTSWANA-listed grocery retailer Choppies last Thursday said trading conditions since last year’s platinum belt strike remained challenging and may continue for the foreseeable future.

The group has 31 stores in South Africa, largely in the North-west, where prolonged strike action in the platinum industry affected the group’s sales in outlets in areas of the country where more than 70 000 mine workers are involved and their families live.

According to the Chamber of Mines, workers lost R10,7 billion in wages during the five-month strike. Local player Shoprite last year recorded more than R1 billion in lost sales, while WalMart-owned MassMart’s stores in towns immediately affected by mining unrest and regions traditionally associated with migrant mine labour, also noted significant sales declines.

Consumer confidence remains muted in South Africa, largely at the lower middle income end.

“The traditional festive season spend has left highly indebted households financially constrained in the new year. This should persist in the first quarter,” Investec chief economist Annabel Bishop said this week.

Choppies, which is partly owned by Standard Chartered, has a market value of around P4,7 billion on the Botswana exchange.

The company, which reported its half-year to December 2014 results last Thursday, said it would continue to evaluate a possible secondary listing on the JSE this year to access new investors and promote increased liquidity in its shares.

Over the period under review, revenue was up 20% to P3 billion and gross profit rose 21% to P644 million.

“Profit growth for the period was impacted by higher interest costs as a result of increased capital expenditure for the expansion into various regions,” it said.

The retailer’s portfolio includes 72 outlets in Botswana and 18 in Zimbabwe. In Botswana, positive topline performance from increased sales volumes was partially offset by continued deflationary pressures due to rand weakness and falling commodity prices, it said.

Choppies expanded its footprint into South Africa in 2008, opening a store in Zeerust, North-west.

Last year the retailer’s first distribution centre in South Africa was opened in Rustenburg. Its stores are largely located in densely populated commuter nodes such as bus depots and taxi ranks, where convenience and value are key.

Choppies plans to grow into East Africa, with emphasis on Tanzania and Kenya.

-BD Live

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