REGIONAL retailer Choppies says cost constraints were only partially relieved by increased prices for the six months ended December 31, 2022.
Choppies is the largest retailer in southern Africa outside of South Africa, with over 161 stores across Botswana, Zimbabwe, Zambia and Namibia and eight distribution centres.
“The group faced a demanding economic environment characterised by stubbornly high inflation, higher interest rates and unemployment, all of which continue to constrain consumer spending by limiting their ability to digest higher prices,” the company said in a trading statement.
“Sales volumes were lower in many categories, exacerbated by competitor discounting, with cost pressures only partly recovered through higher prices.”
“Thirteen new stores were opened since the previous corresponding period, increasing the cost base of the group, with the full potential of these stores only expected to be realised after the reporting period,” it said.
The group has previously said that operating in this market is highly challenging due to the fluctuations and volatility of the Zimbabwean currency since gains made at the national level are lost when converted at the group level due to the weaker currency when compared to the Botswana pula.
In a statement in its 2022 annual report ending June 2022, Choppies revealed plans to expand its footprint in Zimbabwe by opening 15 more supermarkets to add to the current 32.
The Botswana segment is by far the major segment of the group, making up 70 percent of total sales. However, its contribution has decreased over the last few years.
Choppies is currently finalising its financial results for the six months ended December 31, 2022 and expects the HY2023 financial results to fall within the following ranges: 39 percent to 29 percent.
“The company expects to release its HY2023 financial results on or about March 27, 2023.”
Group profit after tax was up 141,7 percent to BWP145 million (US$10,9 million) during the year ending June 2022. The group’s performance was bolstered by strong growth in Zambia and Zimbabwe.
In the same period, the group introduced new products in Botswana, and money transfer services to Zimbabwe through HelloPaisa and Malaicha, where customers pay for groceries in Botswana that are collected in Zimbabwe.