By Pride Mzarabani
Choppies Enterprises Limited is considering selling its Zimbabwe unit due to the challenging operating environment in the country. This environment is characterized by high inflation rates, volatile exchange rates, and a persistent shortage of foreign currency.
Choppies holds a 100% stake in Nanavac Investments (Pvt) Limited, which operates as Choppies Zimbabwe.
In a cautionary circular, the company announced that it is exploring a “possible sale” of its Zimbabwean operations. If successfully concluded, the sale could impact the company’s share price.
“The board of directors of Choppies (‘the Board’) hereby advises all shareholders that the Company has entered into discussions regarding a possible sale of the business operations of Nanavac (Pvt) Ltd, trading as Choppies Zimbabwe, for cash (‘Possible Sale’), which, if successfully concluded, could have an impact on the Company’s share price,” the statement read.
The decision comes at a time when Zimbabwe’s retail sector faces significant challenges, including the proliferation of small stalls and tuckshops, currency instability, and a lack of public confidence in the Zimbabwean dollar (ZWL). These factors have collectively suppressed consumer spending.
Choppies, which has operated in Zimbabwe for several years, is re-evaluating its presence across the region. Sources familiar with the negotiations suggest that the company aims to focus on markets with greater growth potential and more stable economic conditions.
In its annual report for the fiscal year ending June 30, 2024, Choppies acknowledged the increasingly difficult operating environment in Zimbabwe due to ongoing economic turmoil. While the company believes in Zimbabwe’s long-term potential, it noted that additional capital is required to sustain its operations in the country. The group has already invested substantial resources to support its Zimbabwean business.
Choppies also emphasized that there is no certainty the discussions will lead to a formal transaction. Any sale would require approval from the Zimbabwean Competition and Tariff Commission before proceeding.
Over the past two years, Zimbabwe’s retail landscape has shifted significantly toward the informal sector, leading to a 30% reduction in footfall for formal retailers. This trend has increased competition for businesses like Choppies.
Shareholders are advised to exercise caution when trading Choppies shares until further announcements are made.
Choppies currently operates 30 retail stores in Zimbabwe. Founded in 1986, the company is primarily listed on the Botswana Stock Exchange (BSE) and has a secondary listing on the Johannesburg Stock Exchange (JSE).
The potential exit of Choppies from Zimbabwe raises concerns about the long-term viability of retail operations in the country, particularly for foreign companies. Earlier this year, TM Supermarkets and food world closed several branches in Harare, citing increased competition from shopping malls and informal traders.
