Shoprite Looks Set to Totally Dispose of its Nigerian Subsidiary
Arrangements leading to the eventual closure of Shoprite Nigeria are at the final stage.
Africa’s retail giant, Shoprite holdings Limited, has revealed that arrangements on the complete disposal of its Nigerian Subsidiary, retail Supermarkets Nigeria Ltd was being completed.
The South African-based retail behemoth had first disclosed its intention to leave the country last year, owing to the streak of losses it made from its investments in Nigeria.
After due consideration by the Board of the Group in April 2020, the intention to dispose of a majority stake in its Nigerian operations was approved.
Following this move, the management of Shoprite holdings received interest from potential buyers, and after key talks with buyers, it is at the approval stage in terms of the sale of its Nigeria supermarket operation.
This move became possible after the company embarked on a process to identify a strategic partner that will improve the performance and operational efficiencies of the business in Nigeria.
According to a report by The Punch, the Chief Executive Officer of Shoprite Holdings Limited, Pieter Engelbrecht revealed that Shoprite’s exit arrangement from the Nigerian market is at the final stage.
“From here, our capital allocated to the region remains at a minimum and we continue to manage costs as best as we can,” he said.
Issues to note
Shoprite Nigeria in 2020 made a total loss of R87 million rand, down from R345 million loss it made in 2019, when converted to naira using the conversion rate indicated in the company’s financial statement for 2020, the subsidiary made a loss of about N1.98 billion in 2020, and a loss of N8.85 billion in 2019 from its operation.
The cumulative foreign currency losses recognized in other comprehensive losses in relation to Shoprite’s discontinued operations in Nigeria as of 28 June 2020 was R488 million; this in naira is valued at N21.47 billion.
As of June 2020, the total assets of Shoprite’s subsidiary in Nigeria are put at N74.8 billion (R1.701 billion), while its total liabilities in naira run to about N84.1 billion (R1.911 billion).
In case you didn’t know
The South African retail giant is a famed employer of labor in Nigeria, with approximately 2,000 employees who are 99% Nigerians, across about 26 outlets in the country.
Based on Shoprite’s status in the country, there have been reactions on social media on the group’s move to discontinue its operations in Nigeria after 16 years of operations, as Nigerians understand this will further compound the prevailing level of unemployment in the nation.
Recently report suggests that workers of the retail giant, Shoprite embarked on a nationwide industrial strike action to demand proper information on staff benefits as well as terms of sale to interested investors who are on course to acquire the Nigerian subsidiary of the South African retail outlet.
Interesting right. Let us see how it all ends.