The retailer said Zimbabwe’s sales declined by 35,4 percent during the half year period, weighing down the overall group operations.
The retailer said the economic situation in Zimbabwe continues to be a challenge to the segment as Choppies may need to fund its operations.
“As reported in our June 2023 results, the Zimbabwean Dollar (ZWL) continued to significantly weaken during the reporting period,” Choppies said in its financials.
“The country has been struggling with economic challenges for many years, including high inflation, high unemployment levels, and a shortage of foreign currency. As a result of the above-mentioned factors, Pula sales decreased by 35,4 percent.”
During the half year, the retailer said earnings before interest and taxes and earnings before interest, taxes, depreciation, and amortization in Zimbabwe decreased by 77,8 percent and 53,1 percent, respectively, as cost inflation reduced margins.
Adjusted earnings before interest and taxes and earnings before interest, taxes, depreciation, and amortisation decreased by 258,3 percent and 158,8 percent during the period under review respectively.
Choppies said despite the significant declines in profitability, the segment is still profitable, including the legacy debt receipts.
“We have implemented several measures to reduce losses and enhance cash flows. During the reporting period, two stores were closed and one store was relocated. We also indefinitely deferred a portion of the remuneration of the senior management team. We are also planning to close or relocate at least four stores to limit losses post the reporting period,” Choppies said.
The group said during the half year, it changed the functional currency of the Zimbabwean segment from Zimbabwean Dollars to United States Dollars.Overall, the group’s retail sales increased by 21,3 percent to BWP4 258 million during the half year to December 31, 2023 driven by 10 new Choppies stores and the acquisition of 100 liquor and hardware stores from Kamoso as well as other Kamoso divisions.
Price growth increased 0,6 percent mainly due to weaker translation exchange rates during the period under review while sales volume for like-for-like stores increased by 1,6 percent.