South African retailer to concentrate more on home market
Company closed shops in Australia and Poland in last year
Mr Price Group Ltd. plans to close its Nigerian business in favor of a stronger focus on its home market of South Africa.
The specialist in mid-range clothing, sports goods and homeware has already shuttered four of its five Nigerian stores and expects to close the last one in the coming months, Chief Executive Officer Mark Blair said in a presentation.
Nigeria is the third country that Durban-based Mr Price has recently exited, after Australia and Poland last year.
South African companies have long struggled to operate in Nigeria, encountering supply-chain disruptions and challenges in getting funds out of the country.
Woolworths Holdings Ltd., the South African seller of designer clothing and organic food, quit the West African nation in 2013, while grocer Shoprite Holdings Ltd. said last year it may close some stores in the country.
“We are really going to focus on South Africa in a more concentrated way,” Chief Financial Officer Mark Stirton said in the same presentation.
Mr Price expects “a lot of distress among retail peers” in South Africa, which is gradually emerging from a lockdown that has devastated the economy.
Retailers not selling food or medical supplies were closed for five weeks through April, and were only allowed to fully open at the start of this month.
Mr Price didn’t declare a final dividend and has frozen head-office salaries to conserve cash.
Mark Blair, chief executive of the clothing and homeware retailer, told analysts at the group’s full-year results presentation on Thursday that it was exiting Nigeria after walking away from Australia and Poland last year.
Mr Price, which reported a 10.4% fall in annual earnings, has closed four of its five stores in the West African country and expects to close the last one in the coming months, Blair said.
“Quite frankly I’m not prepared to invest any further whether it’s investment in time or in money into a country that is volatile as it is,” he said.
“In the early days we were making money but now we just came up against too many roadblocks, whether it’s getting the money out, etc,” he said.
The firm is also reviewing franchise operations.
In recent years Mr Price has taken a cautious approach to international expansion across and outside Africa as organic growth has proven challenging and “distracting”.
The company’s decision to exit Nigeria follows a decision by homeware and clothing retailer TFG last week to leave Kenya and Ghana.
Mr Price, which also sells sportswear, saw revenue in the year to March 28 rise 2.1% to 23 billion rand ($1.32 billion), with retail sales up by 1.5%, boosted by clothing and home divisions.
It did not declare a dividend in order to preserve cash.
The company has identified 300 million rand worth of cost saving initiatives, which are largely related to employment costs and also include a 23% reduction in budgeted capital expenditure for the 2021 financial year, group CFO Mark Stirton said at the presentation.
Last month it blazed a trail by announcing plans to sell shares to pursue growth opportunities, a move later replicated by rivals The Foschini Group Ltd. and Pepkor Holdings Ltd.