CHOPPIES says its business in Zimbabwe faltered significantly in 2023 compared to other regional operations in Botswana, Zambia and Namibia owing to currency and inflation related issues that stalled growth.
Zimbabwe with 33 stores is Choppies Group’s second-biggest operation after Botswana.
The retail group indicated that Zimbabwe’s dip in operational performance, was mostly a result of economic turbulence the country is going through characterised mainly by high inflation and high unemployment levels that impacted demand.
Inflation remains topical in local economics as it continues to heavily deplete the earnings of the local workforce which continues to earn the Zimbabwean dollar against a background of mostly USD dominated economy.
Zimbabwe dollar according to Choppies, has significantly been volatile and weakening owing to an array of factors that include weak consumer confidence, growing appetite for United States Dollars, speculative behaviours and general market indiscipline.
Choppies says Zimbabwe is likely going to continue to grapple with a myriad of issues including triple-digit inflation, a development that will severely dent spending capabilities.
In the statement of the financials, Choppies chief executive officer, Ramachandran Ottapathu, said the group was closely monitoring Zimbabwe’s exchange rate given its potential impact to affect the group’s profitability.
“Zimbabwe has been our main challenge and concern during the year as growth stalled and the currency issues continue. Hyperinflation is inflicting serious pain on our figures continuously.
“We had a much stronger second half in the 2023 financial year, and this trend continues except for Zimbabwe. We are keeping a close eye on conditions in the country,” said Ottapathu.
Choppies chairman, Uttum Corea, said Zimbabwe remains the group’s major concern at the moment.
“We can only hope that going forward there will be much-needed stability for the country’s volatile currency,” Corea said.
However, Choppies’ operational viability continues to be tested and the group’s observation is that local consumers are increasingly preferring more affordable and convenient shopping options.
The group indicated that consumers have significantly shifted to shopping at smaller stores and from formal retailers because smaller outlets can operate with lower overhead costs, which allows them to offer lower prices to consumers and better exchange rates not necessarily compliant with exchange laws.
“Zimbabwean consumers will remain price-sensitive and shift their spending towards cheaper alternatives, and to the informal sector.
“This is important for consumers who are struggling to make ends meet in a difficult economic environment where salaries have been decimated by high levels of inflation and currency depreciation,” said the group’s chief finance officer Minnesh Rajcoomar.
Except for hyperinflation issues that affected profitability in the Zimbabwe segment, the group performed well in all other countries.
Choppies demonstrated a satisfactory performance all around the year recording growth in both stores and revenue in Botswana, Zambia and Namibia.
Consequently, Pula sales declined by 35,4 percent while EBIT and EBITDA experienced sharp declines of 77,8 percent and 53,1 percent respectively.
Choppies says its operations in Botswana and Zambia have remained stable in the face of challenging economic conditions, with potential for growth going forward together.
Choppies is one of the largest retail groups in Southern Africa with 177 stores across Botswana, Zimbabwe, Zambia, and Namibia and 10 distribution centres.
In Botswana, Choppies has a retail space of 134 814 square metres, followed by Zimbabwe whose retail space covers 43 881 square metres (employed 1 429 people as of 30 June 2023)
The group indicated that it remains focused on growing its footprint in the region and will take time to build economies of scale, particularly in Namibia.
Source: BW
