With the sluggish domestic economy growth and tough trading conditions beginning to weigh heavily on the different sectors, Choppies Group, the market leading mass grocery retailer in the country, has also reported a downward movement in its Profit After Tax (PAT) for the 12-month period that ended June 2016.
The BSE-listed retailer’s financials show that its PAT went down by 48 percent from P104 million to P197 million. The group’s revenue went up by 24 percent from P5.9 billion in June 30, 2015 to P7.4 billion in June 30, 2016. Gross Profit, on the other hand, went up by 12 percent from P1.3 billion in June 2015 to P1.4 billion in June 2016.
Apart from the key financial indicators, the Choppies financials also show that the company is not performing well at its South African and Zimbabwean stores which incurred significant losses.
In South Africa, Choppies attributes the losses to depressed trading in areas dominated by mining but has highlighted that a focused management action has resulted in an improvement in sales and margins. While trading conditions remain challenging, early indications are that these actions will advance South Africa to improved results.
“The acquisition of Jwayelani, which trades in KwaZulu-Natal and the Eastern Cape, was successfully executed. Jwayelani consists of 21 stores, a distribution centre and a meat processing factory,” reads a statement accompanying the results.
Losses incurred in Zimbabwe are said to be due to depressed economic conditions, which have resulted in a shortage of cash in circulation, causing customer purchases per transaction to drop markedly . However, footfall increased strongly demonstrating the desire of customers to shop at Choppies. Renewed management focus has resulted in improved margins in recent months and the group stated that it anticipates returning to profitability in the coming year in Zimbabwe.
“Our operations in these countries will remain loss making in FY2017 as we continue to build our store base and invest in operational infrastructures,” said Choppies CEO Ram Ottapathu this week.
For the local market, Ottapathu said that the operations traded well and maintained market share despite challenging economic conditions. The company is also looking into penetrating the Zambian and Kenyan markets with operations slated to commence with the opening of five and eight stores, respectively.
Meanwhile, a look into the group’s total assets shows an improvement of 18 percent from P2.4 billion in June 2015 to P2.9 billion June 2016.