Arrangements leading to the eventual disposal of Shoprite Nigeria is at the final stage.
Africa’s retail giant, Shoprite holdings Limited, has revealed that arrangements on the complete disposal of its Nigerian Subsidiary, retail Supermarkets Nigeria Ltd was being completed.
The South African based retail behemoth had first disclosed its intention to leave the country last year, owing to the streak of losses it made from its investments in Nigeria.
After due consideration by the Board of the Group in April 2020, the intention to dispose of a majority stake in its Nigerian operations was approved.
Following this move, the management of Shoprite holdings received interest from potential buyers, and after key talks with buyers, it is at the approval stage in terms of the sale of its Nigeria supermarket operation.
This move became possible after the company embarked on a process to identify a strategic partner that will improve the performance and operational efficiencies of the business in Nigeria.
According to a report by The Punch, the Chief Executive Officer of Shoprite Holdings Limited, Pieter Engelbrecht revealed that Shoprite’s exit arrangement from the Nigerian market is at the final stage.
“From here, our capital allocated to the region remains at a minimum and we continue to manage costs as best as we can,” he said.
Shoprite Nigeria in 2020 made a total loss of R87 million rand, down from R345 million loss it made in 2019, when converted to naira using the conversion rate indicated in the company’s financial statement for 2020, the subsidiary made a loss of about N1.98 billion in 2020, and a loss of N8.85 billion in 2019 from its operation.
The cumulative foreign currency losses recognized in other comprehensive loss in relation to Shoprite’s discontinued operations in Nigeria as of 28 June 2020 was R488 million; this in naira is valued at N21.47 billion.
As of June 2020, the total assets of Shoprite’s subsidiary in Nigeria are put at N74.8 billion (R1.701 billion), while its total liabilities in naira run to about N84.1 billion (R1.911 billion).