South African retail giant Shoprite reported Rand 2.74 billion or $161.4 million in sales of merchandise (gross revenue) from Nigeria. This was contained in the recently released annual filing of its results. Shoprite reports its earings in South African Rands.
According to Shoprite, merchandise sales from Nigeria fell from R2.917 billion in 2019 to R2.74 billion in 2020. The report is for the 52 weeks ending June 2020. Merchandise sales represent proceeds from all items sold in Shoprite Nigeria including those of third-party sellers.
Shoprite Nigeria also reported a loss after tax of R87 million in the period under review. Loss after tax in 2019 was R345 million.
Shoprite Exit from Nigeria
The company also confirmed that its planned exit from Nigeria is underway and that due diligence of its Nigerian operations was close to being completed.
“The due diligence process is currently in progress and expected to be completed by the end of September 2020. Management considers it highly probable that a majority stake or the Group’s entire shareholding will be sold after the reporting date. The associated assets and liabilities are consequently presented as held for sale in the 2020 statement of financial position.”
Shoprite, which has spent 15 years in Nigeria, stated that customer visits for the year declined by 7.4% due to the pandemic lockdowns. The company blames weaker Nigerian operations on Covid-19 induced lockdowns which negatively affected earnings.
According to Shoprite Group CEO Pieter Engelbrecht:
“Overall, it has been a difficult six months for Supermarkets Non-RSA given lockdown regulations which impacted store openings, days and hours of trade, as well as severely restricting transport in some countries, impeding our employees and customers’ ability to get to our stores.”
Bottom Line: This is the first time Shoprite is reporting earnings from its Nigerian operations as a separate line item. A sale of R2.74 billion is equivalent to about N61.9 billion when converted to naira using the current exchange rate. Nairametrics reported that the company could be valued as much as N25 billion.
Whoever ends up buying Shoprite will have to worry about the outcome of the litigation it is facing in Nigeria as well as likely tax liabilities which it is currently negotiating with tax authorities.