The Sunday News
FAST expanding regional retail chain Choppies Enterprises has secured US$15 million from Barclays Bank of Botswana aimed at expanding its business operations in Zimbabwe which will see an additional 12 new stores opened before the end of the year.
The Botswana headquartered retail group which announced a secondary listing on the Johannesburg Stock Exchange on Wednesday said its main aim was to see an additional 50 stores being opened in Zimbabwe in the medium term.
The group which is primarily listed on the Botswana Stock Exchange already runs 18 stores in Zimbabwe, mostly in Bulawayo where it has opened 15 stores since 2013 and three in Harare this year.
In a comprehensive pre-listing statement sent to shareholders before the JSE listing, the group announced that the loan would attract an interest of 350 basic points above the bench mark rate (Bench mark rate being three-month USD LIBOR rate).
“(The loan) will be paid through quarterly repayments of US$274 222 over five years,” the group announced.
Choppies said Zimbabwe was significantly under-penetrated by formal retailing which makes just 25 percent of retail sales hence the aggressive expansion programme.
“There is substantial expansion potential from the hubs built in Bulawayo and Harare and Choppies intends to expand nationwide. New regions in Zimbabwe include Mutare, Gweru, Bindura and Masvingo.”
It added that including the expansion in the new cities, it was planning to open 12 new stores by December and expects to operate up to 50 stores in the medium term.
“There is an opportunity for over 30 stores in Harare alone.”
It added that it had structured its expansion projects in Zimbabwe in phases that would see the group spending P36,5 million (US$3,7m) next year and P27,4 million (US$2,8 million) in 2017.
The retail chain made a grand entry in Zimbabwe in 2013 when it acquired 10 Spar stores which were previously operated as Spar Franchises by SAI Enterprises (Private) Limited through its subsidiary Nanavac Investments Private Limited for a consideration of P223 081 485 (US$22,5 million).
SAI Enterprises was owned by Bulawayo businessman Mr Raj Modi.
Since then it has added five more shops in Bulawayo and three in Harare.
It also runs two distribution centres in Bulawayo and Harare.
This has brought the total area in which the group is operating in Zimbabwe to 6 850 square metres in Bulawayo and 3 000 square metres in Harare.
The group noted that Zimbabwe operations had performed above expectations hence the need to expand operations.
In its first year of operations, Choppies said Zimbabwe business generated revenues of P424 million, ($42,8 million) with an EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) margin of 7,1 percent and profit after tax margin of 4,3 percent.
“Operations in Zimbabwe continue to grow in volume and in revenue. Choppies have identified sites right across the country, with the intention of transforming the brand into a national chain in the near term.”
In Botswana the company runs takeaways in most of its stores and the concept will be introduced in all stores in Zimbabwe
“The launch of a ‘store-in-store take-away’ concept, Choppies Fried Chicken, has been well received by customers in Botswana. There are plans in place to roll this concept out in South Africa and Zimbabwe.”
Choppies also added that it had integrated its operations across the countries through an Enterprise Resource Planning IT system, which provides centralised management with real-time information to aid decision making.
The group operates 125 retail outlets in southern Africa, comprising 72 stores in Botswana, 35 stores in South Africa and 18 stores in Zimbabwe.
Inclusive of Zimbabwe the group said it intended to add 200 stores in five countries by the end of next year.
It employs more than 11 000 people across all of its operations.
Apart from the established markets, Choppies said its aim was to expand across the whole of sub-Saharan Africa.
Its immediate new market focus is, however, on Tanzania, Kenya, Namibia and Zambia.
Its secondary listing on the JSE is aimed at raising R575 million ($47,3 million) to finance some of the expansion projects.
