Shoprite has secured a $5.5m loan to expand its store network in Kenya from Stanbic Bank. The retailer has also revealed its two new stores will open next week (Nyali, Mombasa) and next month (Waterfront Karen, Nairobi). Elsewhere, media speculation that Choppies will exit Kenya (and probably Tanzania too) is rising.
In its latest financial update, Shoprite has revealed that the funding for Kenya is part of a larger $764m loan facility the South African retailer is using to fund its store opening program of 126 additional stores. Shoprite has said that it will complete a number of longer term strategic projects by the end of its financial year in June 2020. CEO Pieter Engelbrecht has said:
“We are critically assessing capital spend in the pursuit of growth that is cash generative, return accretive and strategically beneficial.”
Shoprite still backs its international plan, but it is not without its setbacks. Currency devaluation in Angola and Nigeria has hammered sales once they are converted back into rand.
Rather, the focus now will be on “growth opportunities in our home market, inclusive of our established African operations, rather than pursuing businesses in foreign geographies.”
Elsewhere, speculation is rising that Choppies may exit East Africa. Recently, Choppies struck a deal with the Association of Kenya Suppliers to settle a $5.7m debt owed to suppliers. The move, in which local partner Export Trading Group settles the debts is likely to see its equity stake in Choppies’ Kenya operations to rise from its current 25% stake. Choppies has also been forced to close stores.
Kenya’s East African newspaper has also reported that Choppies stores in Tanzania – it has outlets in the Aura Mall, Mlimani City and Makumbusho (all in Dar es Salaam) – are looking short of stock on its shelves. It quotes an unnamed Choppies employee saying that the Makumbusho branch will close this week.
Tanzania is a notoriously hard market for international supermarket chains: Shoprite, Nakumatt and Uchumi have all opened stores and subsequently exit. From our conversations with international retailers, none mention Tanzania as a short term target market.
