Choppies on the chopping block

Troubled Botswanan retailer Choppies has indicated that it intends to dispose of its supermarkets in Kenya, Tanzania, and South Africa. Choppies currently operates more than 200 outlets in eight countries in Southern and Eastern Africa, with Botswana and South Africa accounting for the bulk of these – 85 and 88 outlets, respectively, according to the retailer’s most recent financial reporting (for the six months to December 2017).

At an extraordinary general meeting held in Gaborone on August 28th, company director Wilfred Mpai commented: “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. In Botswana, there is steady income flow under difficult trading circumstances. South Africa North West business is distressed and identified for disposal.”

Local media reports suggest that Choppies supermarkets in both Kenya and Tanzania have not been adequately stocked for months, and the retailer is reported to have issued redundancy notices to more than 200 staff in Kenya at the end of last month.

At the same meeting, suspended Choppies CEO Ram Ottapathu was re-appointed as a director of the company by a shareholder vote, as were a number of his allies. Ottapathu, who has led Choppies since the early 1990s when it consisted of a single store in the town of Lobatse, holds a 19.5% stake in the retailer. He had been due to face disciplinary proceedings at the end of September in the wake of legal and accounting investigations that were initiated by the board earlier this year.

These investigations raised questions with regard to how inventory and bulk sales were accounted for in Choppies stores in South Africa and Zimbabwe, in addition to Ottapathu’s acquisition of a substantial stake in a Botswanan retail that is a director competitor of Choppies.

Choppies has yet to publish its results for the 12 months to June 2018, and trading in its shares on the Botswanan and Johannesburg stock exchanges has now been suspended for almost a year. It recently indicated that its 2018 results would not be published until “at least” November 2019.

If you want more detailed information on Choppies’ travails, you may be interested in Sagaci Research’s Choppies Research Report

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