Cash-strapped local retailer Choppies has announced that it will exit the Kenyan market through its subsidiary in its 2020 financial year.
The Botswanan retailer, which announced plans to exit the Kenyan market in September last year, has over time cited negative cash flow as reasons to ditching the competitive market.
“Choppies Distribution Kenya Limited is a non‐operating entity and since the cash flow of Choppies Enterprises Kenya Limited (Kenya) was negatively impacted by adverse trading conducts. Management has decided to fully impair Choppies Distribution Kenya Limited and exit from the country during the financial year 2020,” the Group revealed in its 2019 Annual Report.
This comes four months after the management put up for sale its retail equipment and property in Kenya.
“All the stores except one is disposed of during the financial year 2020 and the realized amounts have been used to settle the liabilities, ” the management said.
“The Board is hopeful to complete the remaining formalities and exit the country by once travel restrictions have been lifted.”
The Retailer had over 15 outlets that it acquired from Ukwala Supermarket in 2015.
Choppies acquired 75 per cent stake in Ukwala at an estimated Ksh1 billion. The 25 per cent stake is held by the local subsidiary, Export Trading Group (ETG).
Some of the branches spread across the country in major towns including Nairobi, Nakuru, Kericho, Bungoma, Kisumu, Kisii and Athi River, have been occupied by Tuskys Supermarket, Quick Mart Supermarket, Chandarana.
In recent times, Choppies has laid off a total of 583 workers as it struggles with strained cash flows.
In court documents, in the month of November 2019, 486 workers were declared redundant and 97 others had quit earlier.
The Group disclosed Ksh850 million in local banks at the end of its operations in the country in October last year.
Kahawa Tungu understands that it received a Ksh300 million overdraft facility from the United Bank of Africa (UBA) Kenya and Ksh.300 million bank facility with Absa Kenya to finance expansion operations at 12.7 per cent interest.
In July 2019, the retailer revealed it obtained a Ksh250 million overdraft facility from I&M Kenya to finance working capital over a five-month period- a facility guaranteed by Shanta Retail Holding- a minority shareholder in the chain.
Choppies also received an additional Ksh.430.8 million facility from the minority shareholder (Shanta Retail Holding Limited) before opting out of the local scene in October.
Choppies is the second giant retailer to fall in the Kenyan market in the last couple of years, after Nakumatt.