South African retail giant Shoprite Holdings has announced its decision to pull out of both Ghana and Malawi, marking its sixth and seventh market exits across Africa outside its home country.
The move is part of the company’s continued efforts to restructure its operations and focus more heavily on its domestic market.
According to Reuters, Shoprite confirmed on Tuesday that its subsidiary, Shoprite Malawi, entered into an agreement on June 6 to sell its five operating stores.
The deal is still subject to regulatory approval, including from the Malawi Competition and Fair Trading Commission and the Reserve Bank of Malawi.
In Ghana, Shoprite revealed it had received a binding offer in June for the acquisition of seven stores and a distribution warehouse.
The company described the sale as “highly probable,” signaling a clear and definitive withdrawal from the country, which had once been seen as a promising market in West Africa.
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Shoprite’s decision underscores the ongoing challenges faced by international retailers in various African economies.
The company cited multiple operational difficulties in these regions, ranging from currency volatility and rising inflation to restrictive import policies and leases denominated in U.S. dollars, all of which have significantly impacted its profit margins.
As a result of the planned exits, both the Ghanaian and Malawian operations have been classified as discontinued in Shoprite’s financial reports, in line with IFRS 5 accounting standards.
The announcement immediately impacted the company’s stock, with Shoprite’s shares falling by 2.60% on the Johannesburg Stock Exchange (JSE) by 07:53 GMT, reflecting investor concern over the retailer’s shrinking African footprint.
These latest withdrawals add to Shoprite’s list of market exits, which in recent years has included Nigeria, Kenya, the Democratic Republic of Congo, Uganda, and Madagascar.
Over the past four years, the company has steadily scaled back its pan-African ambitions due to ongoing operational and financial hurdles such as currency devaluation, regulatory delays, supply chain issues, and lower-than-expected returns on investment.
In stark contrast to its retreat from other African markets, Shoprite has been expanding aggressively within South Africa.
Over the last year, the company has opened hundreds of new stores domestically, grown its Sixty60 e-commerce delivery platform, and diversified into other retail segments including pet care, health products, and outdoor equipment.
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Image Credit: The Citizen