Shoprite Holdings Limited has initiated a formal process to consider the potential sale of all, or a majority stake in its subsidiary in Nigeria. This is contained in a SENS Announcement “Operational and voluntary trading update (52 weeks ended 28 June 2020)” published on the company’s page on the website of the Johannesburg Stock Exchange.
Shares in South Africa’s Shoprite Holdings shot up over 11% on Monday after it reported higher total sales and the information on the considerations to sale its stake in its Nigerian subsidiary.
Regarding the discontinuation of operations, the company stated “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.”
The company, which owns more than 2,800 outlets across Africa, said in a trading update it was pursuing the sale after reviewing its operating model and receiving approaches from various investors.
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The continent’s top supermarket has been reviewing its long-term options in Africa as currency devaluations, supply issues and low consumer spending in Angola, Nigeria and Zambia have weighed on earnings.
Its South African supermarkets division grew by 8.7% while sales at its supermarkets outside South Africa, excluding Nigeria, fell 1.4%.
The sales in Nigeria declined by 6.7% in the half year ended 30 June, 2020, and expected to decline by 6.3% in the full year 2020.
Source: Johannesburg Stock Exchange
The Group plans to publish its 2020 year end results on September 8.
Shoprite opened its first store in Nigeria in December 2005 and now has a total of 26 stores across eight states in the country including Federal Capital Territory Abuja.
The company says it has employed more than 2,000 people in Nigeria, of which 99% are Nigerians. It also say that it has built more relationships with over 300 Nigerian suppliers, small businesses and farmers.
Written by;
Nnamdi M.
