Choppies Enterprise Limited, the opaque retail store, issued a trading update this week ahead of its two-year ambitious┬áplan that will see its turnover hitting the US$ 1 billion mark (about P 8 billion) per annum.
In its trade update, it warned its shareholders that it has entered “into negotiations with a third party which, if┬ásuccessfully┬áconcluded and subject to regulatory┬áapproval”,┬ámay affect its share┬áprice.
Choppies, which is a giant in the mass grocery retail in Botswana and is the leading retailer of fast moving goods and general merchandise, has been secretly rolling up its sleeves┬áto spread its footprint beyond Botswana and South Africa┬áinto the Southern African Development┬áCommunity (SADC) as a grand plan to achieve the US $ 1 billion turnover mark.
“We are planning to acquire other businesses in the region (outside Botswana and South Africa) and we have┬áover P 160 million┬ásitting cash to do that,” Chief Executive Officer, Ram Ottapath, has said.
He added; “Before the end of the year we want to open in one of the SADC countries.”
Ottapath, who is a great follower of the late Steve Jobs, the Apple and the world’s┬áIT icon who died last year, describes him as “a man who succeeded against all odds”.
He has built Choppies ÔÇô 54 store in Botswana –into one of the biggest export brands and is planning to reach a target mark of 75 in two years. He is also aiming to open┬á12 more stores in South Africa in the next two years.
Lately, Choppies┬á brightened the faces of investors by announcing that its half year results to December 31, 2013 will be “significantly better”┬á than it originally thought.
The Lobatse-founded company operates┬á63┬ástores between Botswana and South Africa -┬áand a large number of them in Botswana. It is the “gorilla” in mass grocery retail in Botswana.
Botswana contributes about 83 percent of┬áits total revenue at P 4 billion per annum while the remaining┬á17 percent comes from South Africa. However,┬ágoing forward, South Africa is expected to power the retail chain profits coupled by its┬ástrategic warehousing┬áthat opened in Rustenburg last year.
“South Africa is a huge market and we feel that there are opportunities in semi urban and urban areas,” Ottapath said,┬áadding that “currently they are investing┬áin Limpopo, Northwest, and also looking into Freestate.
“Going forward, a thrust of growth can be expected to emerge out of South African operations where┬áfully fledged operations were commenced by the end of the calendar year, as well as the distribution centre in Rustenburg having an upbeat on the bottom-line.
“Domestic prospects will continue, driven by the group’s competitive advantage over the industry, given its inherent successful┬ábusiness model and market focus,” Stockbrokers Botswana said in its research note.
Choppies controls 30 percent of the national markets share, followed by┬áSpar at a distant 21 percent, Pick ‘Pay 14 percent, Shoprite at 10 and the rest at 25 percent.
Some of the products include household goods, fruit and vegetables, meat and other consumables.
As part of its strategy, it┬ámaintained more convenient shopping hours, which saw it declaring a full year dividend of 3.6743 thebe per share or 31.32┬ápercent during last year.┬á
The company is currently trading at a higher rate of 17.4 times against the market average of┬á11times historic earnings – indicating a higher appetite for the stock.
It joined the BSE main board through Initial Public Offer window early last year at┬á100 thebe per share but its share price has since surged up.
The announcement by the┬áchain store defied tough trading conditions that saw a rising household indebtness, squeezed salary adjustments and┬áhigh interest rates in the market. The tough trading conditions affected the stock during the past year.
According to the researches, the┬ácompany had a stock turnover┬áratio of 13.76 times as compared to 14.13 times for 2011. That showed that the stock was staying longer in the shelves than in the previous year.