Saturday, May 15, 2021

Four years later, Choppies becomes profitable again

Botswana’s biggest retailer Choppies has reported its first profit in more than four years, as the company seeks to turn a new leaf following the past disastrous years riddled with drama.

For the six months ended December 2020, Choppies Enterprises, reported a profit of P37.7 million, a turnaround from the P139.2 million loss registered in the 2019’s half year results. The return to profitability comes after the retailer shut down some of its loss-making stores outside Botswana.

“ In spite of the lock downs implemented in the group’s largest operations, being Botswana and Zimbabwe, coupled with the currency depreciation in Zambia and Zimbabwe, the group did well to reduce the possible huge revenue losses which resulted in a reduced impact on the gross profit,” the company said in a commentary accompanying the financials released this week.

Choppies last year closed its retailers in South Africa, Kenya, Tanzania and Mozambique,  following a failed expansion strategy that nearly sunk the company. The expansion weighed heavily on Choppies and caused a rift between company founders and shareholders who were troubled by the diminishing profits and dividends.

Matters came to head in 2018 when the retailer got in trouble with regulators for failure to publish audited financial results on time after the company external auditor flagged some processes and transactions that could distort the true picture of the company’s financial health.

The review of past records uncovered losses and in the ensuing drama, Choppies decided to quit and exit the loss-making markets. The delayed June 2018 financials  released in December 2019 stunned shareholders and market observers: a P445 million loss in 2018, and another shocking loss of P170 million for 2017 which was initially reported as a P74.6 million profit when KPMG did Choppies’ books.  The losses extended to 2019, with retailer booking in a P428 million loss, and followed with a loss of P370.6 million for the year ended June 2020.

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