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South African grocery retailer Pick n Pay (PIKJ.J) will exit Nigeria by selling its 51% stake in a joint venture as part of its strategy to restructure outside its home market.
South African grocery retailer Pick n Pay (PIKJ.J) will exit Nigeria by selling its 51% stake in a joint venture as part of its strategy to restructure outside its home market, CEO Sean Summers announced on Monday.
Pick n Pay, which entered the Nigerian market less than five years ago through a partnership with A.G. Leventis (Nigeria), currently operates two stores in the country. Its first outlet in Nigeria is located in the upscale commercial and residential area of Victoria Island in Lagos.
This recent exit adds to the growing list of multinationals that have left Nigeria, Africa’s most populous country, in recent times, due to profitability challenges.
According to Reuters, the South African company reported a larger half-year loss on Monday, driven by trading losses in its core supermarket operations and rising borrowing costs.
The country’s third-largest grocery retailer posted a loss before tax and capital items of 1.1 billion rand ($62 million) for the 26 weeks ending August 25, up from a loss of 837.2 million rand the previous year. Trading losses in the Pick n Pay division rose 9.1% to 718.9 million rand, primarily due to a contraction in gross profit margins, the company noted.
However, Pick n Pay reported “solid momentum” in its clothing and online businesses, along with encouraging improvements in the underlying performance of its company-owned supermarkets.
CEO Sean Summers, who is leading efforts to turn the struggling retailer around, expressed “quiet confidence” that the company could reduce trading losses in its Pick n Pay business by up to 50% for the full year.
Meanwhile, the group’s discount Boxer division saw trading profit rise by 16% to 801.4 million rand, driven by a 12% increase in sales. The South African grocer said it will list its low-cost Boxer business on the Johannesburg bourse by the end of the year and plans to raise as much as 8 billion rand ($452 million) in the process, making it the continent’s biggest offering this year.
