- 3.4% increase to P150m from previous year’s P145m
- Growth attributed to addition of 16 new stores and 6.8% price growth
Botswana’s leading supermarket chain, Choppies Group, has announced a notable increase in profit after tax, showcasing resilience in the face of economic challenges.
The company’s profit after tax for the fiscal year ending on 30 June 2023 surged to P150 million, marking a 3.4 percent increase from the previous year’s P145 million.
Choppies Group’s robust performance was driven by several key factors, including a 6.5 percent increase in retail sales, which amounted to P6,433 million compared to P6,042 million in the previous year.
Challenging economic environment
This impressive growth was attributed to addition of 16 new stores and a price growth of 6.8 percent. Sales volumes increased by 1.6 percent, with an exception of the new stores, which showed a decline of 4.6 percent on a comparable basis.
In terms of gross profit, Choppies reported a 4 percent increase to P1,359 million, up from P1,307 million in 2022, despite the challenging economic environment. Gross profit rates in Botswana and Namibia showed marginal growth, while rates in Zambia and Zimbabwe declined.
Choppies has acknowledged the demanding economic circumstances it faced, characterised by persistently high inflation, increased interest rates, and unemployment.
Stubbornly high inflation
“The Group faced a demanding economic environment characterised by stubbornly high inflation, higher interest rates and unemployment, all of which continue to constrain consumer spending and the consumer’s ability to digest higher prices,” it says in its financials released recently.
“Sales volumes were lower in many categories, exacerbated by competitor discounting, with cost pressures only partly recovered through price increases.
“The gross profit margin was accordingly reduced to 21.1 percent from last year’s 21.6 percent due to higher supply chain costs, including fuel and managing prices in response to higher cost inflation and competitor discounting.”
Double-digit price inflation
The company reported that Botswana experienced sales growth, reaching P4,459 million compared to P4,209 million in the previous year. This growth was attributed to volume increases from new stores and double-digit price inflation.
Botswana’s like-for-like sales growth was 2.2 percent, showcasing resilience in a challenging economic environment.
Choppies has noted that its performance in Botswana in the second half of the fiscal year was significantly stronger than in the first half. This improvement was attributed to the implementation of strategic initiatives, effective leadership, and inventory optimisation systems.
Choppies Group sales in the Rest of Africa increased by 7.7 percent, amounting to P1,974 million, driven by the addition of nine new stores, inflationary increases in Zimbabwe and Zambia, and volume growth in Namibia and Zambia.
“However, this was offset by a very weak Zimbabwean Dollar resulting in Zimbabwe’s Pula sales declining by 48.3 percent,” Choppies notes.
Namibia demonstrated remarkable growth, with sales increasing by 60 percent and like-for-like sales growth of 14.4 percent with addition of five new stores.
Zambia also showed positive results with a sales increase of 44.7 percent and like-for-like sales growth of 33.3 percent, with the addition of three new stores.
Choppies expressed confidence in Zambia’s ability to generate taxable profits in the foreseeable future. As for Zimbabwe, the company noted a significant weakening of the Zimbabwean Dollar, especially in the final two months of the financial year.