Choppies Plans Sub-Saharan Africa Expansion in Market Share Pushby
Botswanan supermarket chain plans to open 30 stores in FY '16
Choppies sees fresh-food demand rising alongside formal retail
Choppies Enterprises Ltd., the Botswanan supermarket chain that listed in South Africa in May, plans to open about 30 stores in the year through June and may also expand via acquisitions as the retailer seeks to increase market share in the region.
“We will open stores through organic growth in Botswana, South Africa, Zimbabwe and Zambia,” Chief Executive Officer Ram Ottapathu said by phone on Thursday. The Gaborone, Botswana-based retailer is also seeking to purchase companies and may enter Tanzania and Kenya, he said.
Choppies, which was founded in 1986 and had 129 stores at the end of June, is expanding in sub-Saharan Africa to take advantage of rising household incomes, economic growth, a switch by shoppers to stores from outdoor markets and an increasing demand for fresh food. The company competes with South African retailers such as Shoprite Holdings Ltd., Wal-Mart Stores Inc-owned Massmart Holdings Ltd. and Pick n Pay Stores Ltd., which are also opening stores across the continent. Choppies has no plans to expand beyond sub-Saharan Africa, Ottapathu said.
“In South Africa, it’s very competitive,” he said. “But we have been competing in Botswana with these other chains, so we are used to it.”
Profit in the year through June rose 21 percent to 202.8 million pula ($19.8 million), Choppies reported on Sept. 22. The stock, which started trading in Johannesburg on May 27, has climbed 16 percent to 5.70 rand, valuing the company at 7.2 billion rand.
Choppies trades at 26 times estimated earnings, according to data complied by Bloomberg. That compares with 18 times estimated earnings at Shoprite, South Africa’s biggest grocer, which has a market value of 89 billion rand.