By Getrude Matayo
South African retailer Shoprite Holdings is set to fully exit the Kenyan Market barely two years after launching local operations due to the underperformance of its supermarket.
Shoprite supermarket has been reviewing its long-term options in Africa as currency devaluation, supply problems, and weak consumer spending in Angola, Nigeria, and Zambia have weighed on earnings.
The retailer said it will close or dispose of its two remaining stores, Westgate Mall and Garden City before December, shedding hundreds of jobs.
The company opened its first supermarket in Kenya in 2018 and has continued to receive competition from other retailers such as Carrefour.
According to Shoprite, Kenya has continued to underperform relative to their return requirements. The company said on Tuesday as it posted a 16.6 percent rise in annual group earnings, adding its decision to leave had been cemented by the economic impact of the Covid-19 pandemic.
Shoprite shares jumped more than 11 percent to a five-month high as investors cheered the group earnings, post lockdown outlook, and dividend.
Shoprite, which is retreating in countries outside South Africa, in April closed its Karen branch in Nairobi and shut the City Mall branch in Nyali, Mombasa.
“Most likely we will be out of the Kenyan market by the end of the calendar year, meaning December, either by closing or disposing of,” Said Shoprite CEO Pieter Engelbrecht during the live cast presentation of the retailer’s results.
The decision to leave Kenya comes a month after Shoprite said it was considering selling its stake in its Nigerian Subsidiary.
With more than 2,300 stores across Africa, Shoprite reported record sales of 156.9 billion rands up 6.4 percent more at its discount Usave and mid-to-upper market Checkers stores.
When setting a shop in Kenya, Shoprite said it was taking advantage of the disarray of Kenya’s retail sector. Tow of the country’s three top retailers Uchumi and Nakumatt was in trouble, with the former having closed stores. The former regional Nakumatt collapsed.