Shoprite said it was in the process of disinvesting from Africa’s largest oil and gas producer.
The group said it had decided to embark on a potential sale of the West African business after operating it for 15 years.
It said it had initiated formal proceedings with investors in Nigeria to offload part of, or its entire, stake in the country.
“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,” said Shoprite. “As such, Retail Supermarkets Nigeria Limited may be classified as a discontinued operation when Shoprite reports its results for the year,” the company said.
Shoprite entered Nigeria in December 2005, when it opened a supermarket in a new shopping centre in Lagos.
The decision to disinvest makes it the largest investor to dump Nigeria.
In June, Mr Price announced that it was going to leave Nigeria in the first half of its 2021 financial year.
Shoprite also announced that it had increased total sale of merchandise for the 52 weeks to June 28, including the impact of hyperinflation in the prior year, by 6.4%to R156.9billion($9.08bln), despite the lockdown regulations.
Like-for-like growth for the year was 4.4%. Shoprite beat market expectations as it recorded profit growth in the South African business in a tough environment.
The retailer recorded sales growth, including liquor, of 8.7% from South African supermarkets in the year to the end of June, underpinned by a strong second half, in which sales grew 7.5 including liquor %.
The company said that, as a result of the lockdown, customer visits for the year had declined by 7.4%. However, average basket spend increased by 18.4%.
It said Shoprite and Usave reported full-year sales growth of 6.7%. Checkers and Checkers Hyper reported full-year growth of 13.5%.
Shoprite said in equally, if not more difficult circumstances resulting from Covid-19 lockdown regulations, non-South African supermarkets’ second-half reported an increase in sales of 0.1%, resulting in an overall decline in sales of 1.4% for the year, but in constant currency increased by 6.6%. The group said it had managed meaningfully to improve its financial position since reporting in February 2020.
Mergence Investment Managers analyst’s Lulama Qongqo said Nigeria has been a headache even for the most astute business minds in South Africa, including MTN, Tiger Brands and Woolworths.
“The one thing that has been out of companies’ hands, though, has been the deterioration in macroeconomic conditions related to the oil price, over and above challenges related to the Nigerian government South African businesses are mostly learning that you can’t just copy and paste. Nigerian consumers have their own behaviour patterns and tastes,” Qongqo said.
Shoprite shares gained 8.47% to close at R113.43($6.57) on the JSE yesterday.
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