Botswana based retailer, Choppies Enterprises Limited has attained its first profit since 2016 of P37.7 million (US$3.4m) in the six months ended 31 December 2020, a rise from the loss of P139.2 million (US$12.56m) attained in 2019.
According to the company, the turnaround performance is attributed to the benefits from restructuring the business following the exit from underperforming investments.
Despite the impressive bottom-line performance, the group’s revenue decreased by 8.7% to P2.711 billion (US$244m).
This decline was a result of negative volume growth due to the impact of the Covid-19 pandemic and currency weaknesses in some markets.
In its home base, Botswana, the business continued to show strong resilience in an increasingly competitive operating environment and poor trading conditions.
Revenue declined by 4.6% with volumes reducing by 6.4%. The gross profit margin, albeit lower at 22.3% remains relatively healthy despite the extremely challenging trading conditions.
Expenditure was well controlled with total expenditure reducing by 15.6% negating some of the decline in gross profit.
One additional store was opened bringing the total number of stores in Botswana to 91 stores.
Crossing boarders into, Namibian, operation continued to show improvement in gross profit even though it still has a very small footprint.
Choppie’s half year revenue decreased by 8.7% to US$244millon, Revenue for this segment increased by 3.2% with gross profit margins improving to 19.3%.
EBIT losses reduced by 95% due to improved gross profit margins coupled with an 8.2% reduction in expenditure.
Meanwhile in Zambia, operation also showed an improvement in gross profit but the continued weakness of the Kwacha against the Pula had a very significant impact on the trading results and expenses.
Even though the Pula revenue declined by 28.5%, revenue in Kwacha grew by 2.4% despite volumes reducing by 8.9%. Gross profit margins improved to 18.9% driven by price inflation.
EBIT losses reduced by 33% due to effective cost control. The Zambian segment consists of 25 stores.
Currency changes and volatility was also witnessed in Zimbabwe which made its operations in the market very difficult.
Revenue declined by 21.3% resulting from a weakening of the local currency against the Pula during the previous 6 months.
Gross profit margins improved to 24.1% with the EBIT reducing to P7.9 million (US$713,000).
Even though this business remains self-sustaining without any cash flow constraints, repatriation of profits to Botswana will continue to be difficult until the economy undergoes a structural change. The segment consists of 32 stores
In spite of the challenges encountered in the different regions, the group did well to reduce the possible huge revenue losses which resulted in a reduced impact on the gross profit.