Shoprite, the South African retailer, has announced that it plans to fully exit the Kenyan market barely two years since it began operations. Shoprite cited underperformance of its supermarkets in the East African country.
In its financials for the year ended June 28, 2020, Shoprite said it will close its two remaining outlets within the next 12 months. It has already shut its Nyali and Waterfront branches.
“In Kenya we will most likely be out of the market by the end of the calendar year meaning December, either by closing or disposing,” said Shoprite CEO Pieter Engelbrecht at a live cast presentation of the retailer’s results.
“Kenya, with three stores at year-end, has continued to underperform relative to our return requirements. Post-year-end, one store has been closed. Given the ensuing economic impact of COVID-19 and our experience to date, we expect to close or dispose of our remaining two stores in the region in the year ahead,” the financial statement read.
Shoprite opened its first store in Kenya in December 2018. In 2019, the retailer opened three branches, two in Nairobi and one in Mombasa. The Waterfront outlet in Karen was the first to go down, followed by the City Mall branch in Nyali, Mombasa. The two remaining outlets at the Westgate Mall and Garden City are headed the same way.
Shoprite was an anchor client at Karen’s Waterfront Mall and Nyali’s City Mall. The retailer posted a R28.2 million (Sh1.8 billion) for its business outside South Africa attributing part of the performance to losses in its Kenya operations.
“Supermarkets Non-RSA’s R28.2 million trading loss showed a marginal improvement on last year, however, was notably impacted by the loss in our Kenyan business, the negative impact of restrictions and store closures due to Covid-19 and a R106.2 million reduction in interest income earned on government bonds and bills,” said Shoprite.