The trailblazing retail giant, Choppies, has posted impressive half year results for the year ended December 2015.
The unaudited group financial results for six months shows that Choppies has not lost steam despite the challenging operating environment made more difficult by slow economic growth.
The Choppies group still relies heavily in its investments in Botswana as its other operations in South Africa, Zimbabwe and Zambia failed to make a thundering positive impact in the latest results.
The group posted a revenue of P3 530 669 000, a 17 percent increase from the corresponding period in 2014. The Earnings Before Interest Tax Depreciation and Amortization (EBITDA) was up 5 percent, while profit before tax stood at P133 474 000, a slight increase of 3 percent. In the end Choppies raked in profit after tax of P104, 103, 000, up by 0.8 percent compared to the six months ended in 2014.
The Botswana based stores remain the main anchor of the group as they contributed 64 percent of the revenue. The revenue was up by 13 percent from the half year period ended in 2014. This modest growth in revenues was despite the sharp devaluation of the rand putting pressure on pula based sales prices.
“However, profitability continued to improve from the scale benefits of our mature infrastructure. We expect this process to continue going forward,” reads part of the statement. In the current period under review, Choppies opened 5 new stores bringing the total number of stores in Botswana to 78.
The Zimbabwe market showed glimpses of opportunity as the revenue shot up to 49 percent but brought in P952, 000 profit before tax, a sharp decline of 87 percent in the previous corresponding period.
“Profitability was negatively impacted by an aggressive pricing and promotions strategy in new stores, and start-up costs for the 8 new stores opened during the period.
Macroeconomic pressures in Zimbabwe continue to affect the spending power of consumers. In addition, deflationary trends have continued due to the strength of the US Dollar” read part of the statement explaining the large drop in profitability.
Choppies entered the Zambian market in November, a month before the end of the six months statement preparation. The late entry brought in a loss before tax of P1 627, 000, amid challenging trading conditions in Zambia which is underpinned by the struggling Kwacha due to the depressed copper prices, the mainstay of the Zambia economy. The resilient Choppies is planning a further expansion of 10 stores in 2016.
In South Africa, the challenging trading conditions saw Choppies fall behind their profitability forecasts as the company posted a loss of about P40 million before taxation.
Despite this, Choppies seems to have an appetite for the elusive South African market as it continues with its expansion; opening 4 new stores to bring the total number of stores in South Africa to 40. In another bold move, the Botswana based company recently acquired 21 Jwayaleni stores in South Africa. This acquisition does not form part of the current financial results as it was concluded after.
The Choppies group boasts of a war chest that comprises of cash and cash equivalents of P221 668 000, after the company spent more than P200 million in investment activities for the period under the review.
The Choppies expansion in Africa follows the Brownfield model, which involves buying existing businesses; this has been confirmed by Ram Ottapathu, co-founder of Choppies in previous interviews. The latest acquisitions involve 10 existing stores in Kenya and the 21 Jwayelani stores in South Africa.
The 21 stores might be Choppies biggest gamble yet as it promises big returns but with the usual risks lurking in the background. The Jwayelani brand generated revenues of over R1 billion with a gross profit margin of 20.35 percent and profit before taxation up by 2.84 percent while the gross profit went up by 8.93 percent.
However, Choppies could lose big time as it still struggles in the South African market which operates on the backdrop of labour strikes, weakening rand, low investor confidence and power shortages. But the Choppies group is confident that the acquisition creates a platform for profitable growth in the South African operations.
A closer look at the recent acquisitions reveals that Choppies is moving away from mining towns whose spending power is largely tied to commodity prices, and with the commodity prices currently down, Choppies is hoping for a safe haven in the KwaZulu-Natal and Eastern Cape through Jwayelani brand.
The investors will be full of anticipation when Choppies finally releases audited results for the end of year in June. Among other things, they will looking at how the recent acquisitions in Kenya and South Africa are faring, and overall it will the group’s expansion plans that will be on trial. No interim dividend has been declared, a final dividend will be declared and distributed after the finalisation of the financial statements for the year ended 30 June 2016.
Lucrative and highly anticipated national lottery tender that saw several Batswana businessmen partnering to form a gambling consortium to pit against their South African counterparts, culminates into a big power gamble.
WeekendPost has had a chance to watch lottery showcase even before the anticipated and impending national lottery set-up launches. A lot has been a big gamble from the bidding process which is now set for the courts next year January following a marathon legal brawl involving the interest of the gambling fraternity in Botswana and South Africa.
Households representing more than half of Botswana’s population-mostly residing in rural areas- do not know where their next meal will come from, but neither do they take into consideration the quality and/or quantity of the food they consume.
This is according to the latest Prevalence of Food Insecurity in Botswana report which was done for the 2018/19 period and represents the state of food insecurity data even to this time. The Prevalence of Food Insecurity was released by Statistics Botswana and it released results with findings that the results show that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.
According to the report, this translates to 27 percent of the population being food secure that is to say having adequate access to food in both quality and quantity. According to Statistician General, Burton Mguni, when explaining how the food data was compiled, Food and Agriculture Organization of the United Nations (FAO), is custodian of the “Prevalence of Undernourishment (PoU)” and “Prevalence of moderate or severe food insecurity in the population based on the Food Insecurity Experience Scale (FIES)” SDG indicators, for leading FIES data analysis and the resultant capacity building.
“The FIES measures the extent of food insecurity at the household or individual level. The indicator provides internationally comparable estimates of the proportion of the population facing moderate to severe difficulties in accessing food. The FIES consists of eight brief questions regarding access to adequate food, and the questions are answered directly with a yes/no response. It (FIES) complements the existing food and nutrition security indicators such as Prevalence of Undernourishment.
According to the FIES, with increasing severity, the quantity of food consumed decreases as portion sizes are reduced and meals are skipped. At its most severe level, people are forced to go without eating for a day or more. The scale further reveals that the household’s experience of food insecurity may be characterized by uncertainty and anxiety regarding food access and compromising the quality of the diet and having a less balanced and more monotonous diet,” says Mguni.
The 50.8 percent of the population in Botswana which was affected by moderate to severe food insecurity are characterized as people experiencing moderate food insecurity and face uncertainties about their ability to obtain food. These people have been forced to compromise on the quality and/or quantity of the food they consume according to the report on food insecurity.
Those who experience severe food insecurity, the 22.2 percent of the population, are people who have typically run out of food and, at worst, gone a day (or days) without eating. According to the statistics, rural area population experienced moderate to severe food insecurity at 65 percent while urban villages were at 46.60 percent and cities/town were at 31.70 percent. Those experiencing the most extreme and severe insecurity were at rural areas making 33.10 percent while urban villages and towns were at 11.90 percent and 17.50 respectively.
According to a paper compiled by Sirak Bahta, Francis Wanyoike, Hikuepi Katjiuongua and Davis Marumo and published in December 2017, titled ‘Characterization of food security and consumption patterns among smallholder livestock farmers in Botswana,’ over 70 percent of Botswana’s population reside in rural areas, and majority (70%) relies on traditional/subsistence agriculture for their livelihoods.
The study set out to characterize the food security situation and food consumption patterns among livestock keepers in Botswana. “Despite the policy change, challenges still remain in ensuring that all persons and households have access to food at all times. For example, during an analysis of the impacts of rising international food prices for Botswana, BIDPA reported that food prices tended to be highest in the rural areas already disadvantaged by relatively low levels of income and high rates of unemployment,” said the study.
According to the paper, about 9 percent of households were found to be food insecure and this category of households included 6 percent of households that ranked poorly and 3 percent that were on the borderline according to the World Food Programme’s (WFP) definition of food security.
Media reports state that the World Bank has warned that disruption to production and supply chains could ‘spark a food security crisis’ in Africa, forecasting a fall in farm production of up to 7 percent, if there are restrictions to trade, and a 25 percent decline in food imports.
Food security in Botswana or food production was also attacked by the locust pandemic which swept out this country’s vegetation and plants. The locust is said to have contributed to 25 percent loss in production.
Global lockdown have been a thorn in diamonds having shiny sales, but a lot of optimism shows with the easing of Covid-19 restrictions, the precious stones will be bought with high volumes towards festive season. The diamond market is however warned of the resurgence of Covid-19 in key markets presents ongoing risks amid the presence and optimist about the new Covid-29 vaccines.
The latest findings published as De Beers Group’s latest Diamond Insight ‘Flash’ Report, which looks at the impact of the pandemic on relationships and engagements, has revealed that in the US that more couples than ever are buying diamond engagement rings. Bridal sales is mostly the primary source of diamond jewellery demand in recent months, De Beers said.
According to De Beers, interviews with independent jewellers around the US revealed that the rate of couples getting engaged has increased compared with the period when Covid-19 first had an impact in the US in the spring.
“In addition, despite challenging economic times, consumers were spending more than ever on diamond engagement rings – often upgrading in colour, cut and clarity, rather than size. Several jewellers speculated that with consumers spending less on elaborate weddings and/or honeymoons in the current environment, they had more to spend on choosing the perfect ring,” said De Beers.
According to De Beers, a national survey of 360 US women in serious relationships, undertaken in late October in collaboration with engagement and wedding website, The Knot. This survey is said to have found that the majority of respondents (54%) were thinking more about their engagement ring than the wedding itself (32%) or the honeymoon (15%), supporting jewellers’ hypothesis that engagement ring sales were benefiting from reduced wedding and travel budgets in light of Covid-19 restrictions.
When it came to researching engagement rings, online was by far the predominant channel for gaining ideas/inspiration at 86% of consumers surveyed, with 85% saying they had saved examples of styles they liked, according to De Beers. According to the survey, only a uarter of respondents said they had looked in-store at a physical location for design inspiration.
“For many couples, the pandemic has brought them even closer together, in some instances speeding up the path to engagement after forming a deeper connection while experiencing lockdown and its associated ups and downs as a partnership. Engagement rings are taking on even greater symbolism in this environment, with retailers reporting couples are prepared to invest more than usual, particularly due to budget reductions in other areas,” De Beers CEO Cleaver said.
According to De Beers Group, its Diamond Insight Flash Report series is focused on understanding the US consumer perspective in light of Covid-19 and monitoring how it evolves as the crisis evolves. Also, the company said, it is augmenting its existing research programme with additional consumer, retailer and supply chain touch-basis to understand the pain points and the opportunities for stakeholders across the diamond pipeline.
Demand for diamonds is as hard and resilient as the precious stone itself. De Beers pocketed US$ 450 million in its recently held ninth rough diamond sales cycle, and the company says it is more flexible approach to rough diamond sales during the ninth sales cycle of 2020, with the Sight event extended beyond its normal week-long duration.
“Steady demand for De Beers Group’s rough diamonds continued in the ninth sales cycle of the year, reflecting stable consumer demand for diamond jewellery at the retail level in the US and China, and expectations for reasonable demand to continue throughout the holiday season. However, the resurgence of Covid-19 infections in several consumer markets presents ongoing risks,” said De Beers CEO Bruce Cleaver recently.
High expectations are on diamonds being a sentimental gift for holiday season or as the most fetished gift. However the ninth cycle was lower than the eighth which registered US$ 467 million. For the last year period which corresponds with the current one, De Beers managed to raise US$ 400.