But retail giant loses P8 million due to alcohol ban
Revenue at Botswana’s largest retail supermarket by market capitalization, Sefalana Group, reached P2.9 billion for the six months that ended 31 October 2020, Sefalana’s unaudited financial results published in the Botswana Stock Exchange show.
The P2.9 billion figure represents a 2 percent increase compared to that of the same period in the prior year. Not only did Sefalana realise an increase in revenue but it also recorded an increase in profit before tax that went up by 23 percent to reach P149 million. Gross profit also went up by 17 percent to P215 million.
Sefalana is the second largest food retailer in Botswana and has a footprint in South Africa, Lesotho, Namibia and Zambia. They recently penetrated into the Australian market after purchasing 40 percent in a Fast Moving Consumer Goods business, Seasons Group.
Because of its large footprint in Botswana, Sefalana generated P75 million of profit in the period under review in Botswana’s business units. This was a 12 percent increase as compared to that of the prior year. “The three main territories in which we are present in Botswana experienced the greatest impact of the COVID-19 pandemic,” Sefalana Group Managing Director, Chandrakanth Chauhan, says in the results.
“This is largely a result of the restrictions placed on the sale of liquor throughout the period, along with the reduction in sales of motor vehicles during a time where consumers are more focused on essential goods and services.”
Chauhan says in the latter half of the previous financial year, the impact of COVID-19 restrictions became apparent and continued into the first half of the current financial year. “Whilst consumers have begun to visit stores more often than during the initial phase of the pandemic, it is not yet at the levels we have seen in the past,” he observes.
“The consumer is still somewhat cautious and tends to focus more on necessities rather than luxuries. The desire for a one-stop shop is very much apparent and we have responded accordingly through offering a wider variety of goods and services in store.”
Chauhan goes on to note that the main reason for the decline in profitability, compared to that of the prior year, was restrictions on liquor sales which have been in place in Botswana for the entire six month period.
“This has resulted in approximately P8 million of lost profit during the period under review,” he says. “This is expected to continue into the second half of the financial year. The liquor industry as a whole has been deeply affected by these regulations and it is not clear as to when normal trade levels will be restored.”
Meanwhile, Sefalana Cash and Carry Limited contributed 55 percent and 23 percent of the Group’s revenue and profit before tax for the reporting period, respectively. Turnover amounted to just under P1.6 billion, which was 1.6 percent down on the prior period.
At the beginning of the financial year, Sefalana operated four hyper stores (Sefalana Hyper), 25 cash and carry stores (Sefalana Cash & Carry) and 29 supermarket retail stores (Sefalana Shopper) across Botswana , giving the group a total of 58 stores in Botswana. During the period, Sefalana expanded its national footprint through the opening of an additional Sefalana Shopper retail store in Shakawe, a Sefalana liquor outlet in Tlokweng while Sefalana Shopper in Molepolole was refurbished.