Chop­pies aims to grow its stores

The Star Early Edition - - NEWS - Mbon­geni Mguni

CHOP­PIES En­ter­prises hurt by a com­mod­ity-price slump that’s led to cus­tomers in min­ing towns be­ing fired, plans to ex­pand its num­ber of stores in south­ern Africa by al­most 25 per­cent over the next two years as it seeks to lure busi­ness in dif­fer­ent lo­ca­tions.

Botswana’s big­gest su­per­mar­ket chain is plan­ning to in­crease out­lets to 250 from 203 at the end of last year, ac­cord­ing to chief ex­ec­u­tive Ram Ot­ta­p­athu.

“We are try­ing to move away from that reliance” on min­ing towns, Ot­ta­p­athu said in an in­ter­view this week at the com­pany’s head of­fice in Gaborone.

“As the foot­print grows, it will not be an is­sue.”

The price of plat­inum, which is mainly mined in South Africa, slumped 28 per­cent in 2015, be­fore only a slight gain, hurt­ing Chop­pies’ busi­ness in towns such as Rusten­burg.

That has been com­pounded by soar­ing food prices, fol­low­ing the worst drought since at least 1904.

In Botswana, state-owned min­ing com­pany BCL closed its un­prof­itable cop­per and nickel op­er­a­tion in Selebi Phikwe last year, re­duc­ing the set­tle­ment of 50 000 to a vir­tual ghost town. Chop­pies has two stores in the area.

The gro­cer plans to open 26 su­per­mar­kets this year at a cost of about R300 mil­lion, Ot­ta­p­athu said.

This will in­clude growth in KwaZulu-Natal, which is not min­ing fo­cused.

Ten of the new stores will be in Zam­bia and one or two stores are planned for Zim­babwe.

Fund­ing will come from its own cash re­serves and a po­ten­tial ex­ten­sion of the date of ma­tu­rity on its short-term debt.

With al­most 500 mil­lion pula (R629.45m) in ex­ist­ing bor­row­ings, any ad­di­tional debt taken will be neg­li­gi­ble, the chief ex­ec­u­tive said.

In 2018, Chop­pies will aim to reach the 250-su­per­mar­ket tar­get be­fore paus­ing the growth ini­tia­tive, he said.

Chop­pies shares have dropped 53 per­cent in Jo­han­nes­burg since the be­gin­ning of last year, the sec­ond worst per­former on the 162-mem­ber FTSE/JSE Africa All Shares In­dex.

Net in­come in the year to June 30 de­clined 52 per­cent to 88.5 mil­lion pula.

With out­lets also in Zim­babwe, Zam­bia, Tan­za­nia, Kenya and Mozam­bique, it has no plans to en­ter more coun­tries this year, Ot­ta­p­athu said. – Bloomberg

PHOTO: BLOOMBERG

An em­ployee pro­cesses a cus­tomer’s card pay­ment at a check­out in­side a Chop­pies su­per­mar­ket in Rusten­burg. Chop­pies plans to ex­pand by al­most 25 per­cent in South­ern Africa.

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