Choppies group unveiled financial results for the year ended June 2017 on Friday showing a 28 percent jump in operating profit for the year. “Balanced growth in revenue and gross profit was achieved. The 2016 operating results benefited from the profit on sale of an aircraft of P20m and higher realised foreign exchange gains of P31m compared to the current financial year. Excluding these two items, group operating profit improved by 28%. Choppies strategy of creating a strong African supermarket business moved forward during the past year with the establishment of businesses in Tanzania and Mozambique,” said the company in a statement accompanying the results. Below the company’s group CEO Ramachandran Ottapathu discusses the business performance further:
With 2017 already half way through, are you confident of meeting all your set targets for this year?
RAM: Yes, I am pretty sure about it. We are very positive and confident.
Please discuss the targets and overall strategy for this year going forward?
RAM: We looking at opening 30 stores this coming financial year which will take us closer to the 250 mark.
Which new countries have you set up in since the start of this year and where else are you intending to open before the end of the year?
RAM: We have set our footprint in South Africa up to Namibia. That’s eight countries and we are focused in improving in those markets.
Will those be through brown field or green field?
RAM: Green field.
How many shops does Choppies have in total?
RAM: 217 stores.
Botswana is a key market for the group; do you believe there is still room for more store openings locally?
RAM: FMCG is a trade where it is never saturated.
Which part of Botswana are you currently looking at to open any new stores?
RAM: We just opened last week in Kang and we will be looking to open in Tsabong and some in the north.
Following the closure of BCL in Selebi-Phikwe, how are two stores faring in terms of business performance and is there no consideration to close another one?
RAM: Our stores there are above the breakeven point. We have no intention of closing any stores in Selebi-Phikwe.
Choppies has previously struggled to meet it set performance targets (profitability) in South Africa and Zimbabwe due to various factors, has there been a turnaround, and how was this achieved?
RAM: South Africa is currently one of the fastest growing regions in the group. We crossed our breakeven point. Zimbabwe as you can see in the result has turned around extremely and continues to do extremely well.
You have achieved a good number of stores in these markets, in particular South Africa over a short period of time, do you have any plans to acquire more stores in those countries?
RAM: Our growth plans are mainly in South Africa and Africa.
Will Choppies at some point consider going outside the continent?
RAM: Not a chance!
You recently introduced a fashion line in your hyper stores, how has the customers’ reaction been in terms of uptake?
RAM: Its growing and the feedback is very positive. This is a three-year business and we are confident that we will have a profitable and sustainable business in the clothing side.
What are other immediate plans for Choppies group in terms of expansion?
RAM: We are consolidating in the areas we are operating in.
The past year’s performance for the group was subdued in terms of overall profit; which steps have the company taken to improve the returns?
RAM: If you analyse the results – I always put into two sections between countries where we have operated in for more than three years and those that we have operated in for less. Performance was subdued in countries where we operated in for less than three years. In countries where we have been operating for more than three years have made money and growing up nicely. It is a matter of scaling up in those areas as well. As years progress we will do well in those areas as well.
Botswana has over the years remained the major contributor to group revenue, is there any emerging strong performer among other countries?
RAM: South Africa has overtaken Botswana’s revenue already as you can see from the figures.
Choppies has introduced its own branded products – what percentage of total overall sold products are these and what is their uptake?
RAM: We have achieved 14 to 15% of revenue from our brands. Our target is 25 percent and above.
Are there any intentions to list in any other markets than BSE and JSE?
RAM: Currently no!
When is Choppies entering the North and West Africa markets?
RAM: I don’t have a mandate to talk about it now.
At the last count what was the total number of Choppies employees across all countries?
RAM: Just about 15 000.