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Botswana retailer, Choppies, throws in the towel and announce plans to exit the Kenyan Market after 4 years of poor sales

Choppies Supermarket. (Business Today Kenya)
  • The rain started beating Choppies when multinational supermarket chains like Carrefour, Shoprite and Game Stores entered the kenyan market and with their financial muscles quickly pushed struggling retailers to the edge. 
  • Choppies has 12 stores in Kenya all of which have been classified as distressed.
  • Choppies entered the Kenyan retail market four years ago after acquiring a 75% stake in Ukwala supermarket for Ksh1 billion ($10 million).

Botswana retailer, Choppies Supermarket is planning to exit the Kenyan market after four years of poor sales.

On Wednesday, the retailer held an extraordinary general meeting (EGM) with its shareholders during which it announced that it would be exiting Kenya and had already listed its Kenyan assets for sale.

Choppies entered the Kenyan retail market four years ago after acquiring a 75% stake in Ukwala supermarket for Ksh1 billion ($10 million). Since then, however, the supermarket has struggling to grow market share in an increasingly competitive retail market.

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The rain started beating Choppies when multinational supermarket chains like Carrefour, Shoprite and Game Stores entered the kenyan market and with their financial muscles quickly pushed struggling retailers to the edge. The recent merger of some of its rivals like Quick Mart and Tumaini has also complicated Choppies path to profitabilty.

“Zambia has a steady performance in a volatile economy, Kenya’s distressed business has been identified for disposal. Tanzania and Mozambique are distressed while Namibia is performing as expected,” Wilfred Mpai, Choppies director told shareholders during a presentation.

“In Botswana there is steady income flow under difficult trading circumstances, South Africa North West business is distressed and identified for disposal.”

Internal wraggles hastens Choppies fall from grace

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Choppies, which has its roots in Botswana where it operates more than 130 stores, has 12 stores in Kenya and had announced plans to treble that number over the next three years before it faced financial difficulties.

Currently all its 12 stores are classified as distressed. This year, Choppies shut down two outlets as the retailer experienced stockouts amid rising operating costs. Choppies is in the process of laying off over 200 workers and has already started talks with Kenya Union of Commercial Food and Allied Workers (Kucfaw) for a favourable compensation package for the affected workers.

Choppies is also facing internal trouble after its CEO, Ramachandran Ottapathu, was suspended in May following accusations of malpractices including sale of ghost stock to inflate sales. This was revealed in a forensic audit.

However, Mr Ottapathu linked his suspension to a fallout among the directors following his push to boost transparency and governance in the Choppies board.

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Choppies shares have been suspended on both bourses since November 1, 2018 on account of the company’s auditors PwC’s inability to finalise the 2018 financial statements due to some irregularities.

Wednesday’s EGM was held to resolve the boardroom wars and review the forensic reports. Choppies chairman and former Botswana President Festus Mogae said he will be stepping down from that role.

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