South African retail giant, Shoprite International Limited says it will consider an outright sale or potential sale of the majority stake of its Nigerian subsidiary, Retail Supermarket Nigeria Ltd.
This is according to Shoprite’s operational and trading update filed at the Johannesburg Stock Exchange on Monday morning. The retail giant said it was planning to discontinue its operations in Nigeria after 15 years of full operation.
“Following approaches from various potential investors, and in line with our re-evaluation of the Group’s operating model in Nigeria, the Board has decided to initiate a formal process to consider the potential sale of all, or a majority stake, in Retail Supermarkets Nigeria Limited, a subsidiary of Shoprite International Limited.
As such, Retail Supermarkets Nigeria Limited may be classified as a discontinued operation when Shoprite reports its results for the year. Any further updates will be provided to the market at the appropriate time,” part of the update read.
According to the company, the decision was due to the effect of the COVID-19 outbreak on the retail industry.
What You Need To Know
Shoprite is a South African company, and they launched their first store in Lagos in December 2005. Its international outlets (excluding Nigeria) contributed 11.6% to group sales and reported a 1.4% decline in sales from its books in 2018.
Furthermore, South African operations contributed 78% of overall sales and saw 8.7% rise for the year.
The retail giant has been struggling with staying afloat in Nigeria recently. Recall, that in H2 2019 Shoprite lost about 8.1% of sales, which was due to the September 2019 xenophobic attacks.
Also, according to reports, another South African retailer, Mr. Price, had announced it would also exit Nigeria and focus on the South African domestic market. This is coming after they closed 4 of the 5 retail outlets in Nigeria.
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