South African retailer Shoprite will fully exit Kenya barely two years after it launched operations.
The exit, Shoprite said, was a result of underperformance of its retail stores in the country, noting it will close or dispose of its two remaining stores before December.
Shoprite, which is retreating in countries outside South Africa, has been closing some stores in Kenya, citing a reduction in shoppers.
“Most likely we will be out of [Kenya] by the end of the calendar year, meaning December, either by closing or disposing,” said Shoprite chief executive officer Pieter Engelbrecht during the 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,” Shoprite added in a notice to shareholders while releasing financial results for the year to June.
Shoprite, which has 2,300 stores across Africa, reported a 6.4 per cent rise in sales for the year to June.
However, the company reported a R28.2 million (Shs61b) loss for its business outside South Africa.
The loss, Shoprite said, showed a marginal improvement on last year but “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 (Shs3.6b) reduction in interest income earned on government bonds and bills”.
Last month, Shoprite announced it would exit Nigeria, noting a number of investors had already approached the retailer and negotiations were ongoing.
The retailer has also indicated a possible exit from African markets outside South Africa informed by a review in its operations and declining sales.
However, it is not clear, where the retailer plans to exit or maintain operations.
In Uganda, where Shoprite has five stores, there has been no indication of an exit plan.
In fact, the retailer has been procuring more spaces in which it plans to add on its already existing five stores spread across Kampala.
Shoprite’s exit from Kenya comes amid increased competition from retailers such as Naivas, Quickmart and Carrefour in a sector where local retailers such as Tuskys are struggling with low sales and mounting debts.