Botswana-based grocery retailer, Choppies, has announced that it will be exiting the South African market, four years after expanding into the country.
It also stated that Festus Mogae would be stepping down as chair and director after the company’s Annual General Meeting, due later this year.
The company has been hit by operational turbulence in recent months, including the delayed release of its annual financial statements, which prompted the JSE to suspend the trading of its shares in November 2018. The Botswana Stock Exchange also suspended the company.
The retailer, which has stores in Zambia, Tanzania and Mozambique, listed on the JSE in 2015, following its entry to the local market.
In a statement issued yesterday, the company said its shareholders have completed a strategic review of its South African business appointed an advisor for the divestiture process.
“As a consequence, the board has concluded that exiting the South African market is the appropriate strategic decision for the company.”
It further stated that is has commenced a process which may result in the divestment of its local business “in whole or in part” and which if successfully concluded, may have a material effect on its stock price.
The company in May announced the suspension of its CEO, Ramachandran Ottapathu, amid a forensic probe into the company’s business dealings. A summary of the investigation conducted by PwC established a number of irregularities inventory records and bulk sales.
One of the findings revealed that, in South Africa, bulk sale items were recorded separately in inventory records from November 2017 onwards.
“There is a strong correlation between the creation of these records and inventory losses reported as arising from stock counts performed from 19 October 2017 to 28 February 2018,” read the summary.
A legal report has recommended that the board should “consider the institution of disciplinary proceedings against Mr Ottapathu”, according to circular issued by the retailer. — Fin24.