Botswanan supermarket chain Choppies in profit, but revenue falls

Botswana’s leading local supermarket chain, Choppies, has returned to profit. In the six months ended December 31st 2020, it registered a profit of P37.7m ($3.4m), a turnaround which has been driven by restructuring and exits from several expansion markets.

Choppies’ revenue fell by 8.7% to P2.7bn ($244m) over the same period. In Botswana, revenue fell by 4.6%, while in Namibia revenues actually increased.

CEO Ram Ottapathu, a trained accountant, might feel that his return to the helm of Choppies has been vindicated by a return to profit. Under his plan, Choppies has aggressively cut total expenditure by 14.3% and in this accounting period the company has finalized its exit from operations in South Africa, Kenya, Tanzania, and Mozambique. Furthermore, Ottapathu has achieved this at a time when the COVID-19 pandemic caused significant uncertainties in trading and brought various supply chain disruptions.

Critics will point out that while it is positive that Choppies is in profit, aggressive cost cuts and revenue loss are not a sustainable route to growth.

Investors have welcomed the news: on the Johannesburg Stock Exchange (Choppies is dual listed), Choppies shares traded at around ZAC80 (80 South African cents) before the news. Today they are trading at ZAC130.