South Africa’s supermarket group, Shoprite Holdings, has announced plans to sell or close its remaining two stores in Kenya by the end of December.
The supermarket group said it will be leaving the East African country two years after it began operations in the country.
On Tuesday, the company said its Kenyan business had underperformed.
“Kenya has continued to underperform relative to our return requirements,” the company said after posting a 16.6 per cent rise in annual group earnings.
The South African firm has renegotiated 48 rental agreements by either reducing rent payments or converting them to local currency, Chief Executive, Pieter Engelbrecht, said.
The group has also restricted capital allocations to its supermarkets outside South Africa, as part of an ongoing review of its operations in Africa.
Shoprite, while declaring final dividend of 227 cents per share, said it had traded ahead of expectations since the beginning of July.
The company said the decision to exit Kenya was influenced by the ripple effects of the COVID-19 pandemic on its operations and earnings.
In August, Shoprite announced plans to discontinue its operation in Nigeria.
The company made the announcement in its operational and voluntary trading update for the year ended June 28, 2020.
The multi-national retail group announced a 6.4 per cent increase (R156.9 billion) in total sales of merchandise for the outgoing year despite the challenges posed by the COVID-19 pandemic.
It, however, announced that it took the decision to discontinue its Nigeria operation “following approaches from various potential investors, and in line with our re-evaluation of the group’s operating model in Nigeria.”
Beyond the reasons given by the retail giant, a PREMIUM TIMES analysis showed that the company may be exiting Nigeria because of concerns around currency fluctuation, profit repatriation, logistic concerns, among others.
It may also be battling to survive a $10 billion debt linked to a legal tussle involving an indigenous Nigerian company, A.I.C Limited.
Tuesday’s decision to leave Kenya comes a month after the company said it was considering selling its stake in its Nigerian subsidiary.
In recent time, the supermarket group has been reviewing its long-term options across Africa as currency devaluations, logistics challenges and weak consumer spending in Angola, Nigeria, Kenya and Zambia have affected its operations and earnings.