Choppies is a mass grocery retailer with a history stretching back to 1986, when the Wayside Supermarket was opened in the small town of Lobatse in Botswana. The company quickly expanded across Botswana and today commands more than 50% of the market share in the country’s grocery retail chain. The group opened its first store in South Africa in 2008, and today operates more than 170 supermarkets across Botswana, South Africa, Zimbabwe, Zambia and Kenya, with further expansions planned into Tanzania.
The company has a primary listing on the Botswana Stock Exchange, and in 2015 became the fourth African company to have an inward secondary listing on the Johannesburg Stock Exchange (JSE), listing 277 million ordinary shares for sale in the Food Retailers and Wholesalers sector.
The group’s JSE market cap stands at almost R7 billion, but Choppies share price has been volatile.
Choppies Shares Growth Driver
Choppies customers are lower to middle income, and the group caters for them in high traffic areas such as taxi ranks, peri-urban areas and small town centres. Stores are relatively small, and customers shop often, buying a small amount of goods and paying cash.
The group’s latest financial data reflected a 17% increase in total revenue to R4.9 billion. 64% of this was generated by the group’s domicile Botswana market, which has improved profitability due to yields from matured infrastructure. Despite continually expanding and investing capital, the group announced a decline in headline earnings of 18% on the back of higher expenses and declining consumer demand.
The South African market (Choppies’ second biggest) has not been performing up to expectations, largely due to difficult conditions in the mining sector. Most of Choppies’ South African stores are located in mining towns and fell behind profitability forecasts. In order to bolster its South African presence, the group made the significant purchase of Jwayelani Retail at the beginning of 2016. This will bring the total number of Choppies stores in South Africa up to 61.
Choppie has already launched three of 10 planned stores in Kenya in 2016, as well as stores in Zambia. Management is currently seeking to buy into Namibia, Mozambique and Tanzania.
Choppies Group Investor Tip
Choppies is a relatively small player compared to retail powerhouses such as Shoprite and Pick ‘n Pay, but it has done well in the markets it operates in, securing a good slice of the market share.
The live online stocks chart shows that Choppies share price has been volatile since listing on the JSE, largely as a result of the challenging economic conditions. The company historically boasts a strong growth trajectory and is a cash-rich business which continues to gain popularity amongst consumers and investors looking to buy Choppies shares.
The group predicts that further expanding its geographical footprint in Africa will yield good profit returns and boost Choppies share price. For the investor looking for a strong alternative to larger JSE-listed retailers, Choppies shares look to be a good purchase.
Choppies : How to buy Choppies Group Shares Online
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