No fewer than eight states in Nigeria will experience a decrease in their Internally Generated Revenue as the South Africa retail megastore, Shoprite Holdings Limited, announces its departure from the country.
Shoprite Holdings Limited had suspended its trading activities after several lockdown restrictions and measures were announced by the federal and state government to control the spread of the coronavirus disease.
The 15-year-old grocery giant, in a statement, said that its operations in Nigeria saw a 6.7% decline in sales for twelve months between June 2019 and June 2020, adding that a formal process to consider the potential sale of all or a majority stake in its supermarkets in Nigeria has started.
The statement from Shoprite reads: “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.
“International supermarkets (excluding Nigeria) contributed 11.6% to group sales and reported 1.4% decline in sales from 2018. South African operations contributed 78% of overall sales and saw 8.7% rise for the year.
“As a result of lockdown, customer visits declined 7.4% but the average basket spend increased by 18.4%.”
Shoprite Holdings Limited, since 2005, has a total of 26 outlets in eight states in Nigeria including the Federal Capital Territory, Abuja. The company has also employed about 2000 workers across the country.
There are speculations that this exit, alongside the economic impact of the coronavirus, would affect the IGR of the states and equally cause thousands to lose their jobs.
States like Lagos, Delta, Ogun, Enugu, Kano, Anambra and Oyo, which make the top 10 highest IGR generated would likely be affected by the exit. Others include Abia, Abuja and Kwara. Similarly, the exit might put a pause on lesser retail outlets and production companies who sell under Shoprite’s franchise.
However, with the exit of a major retail giant in Nigeria, other South African investors might reconsider plans to leave if revenue continues to decline.
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