ARTICLES

Choppies

Choppies is a supermarket chain which operates in Botswana, Namibia and Zambia. It is listed both on the Johannesburg Stock Exchange (JSE) and on the Botswana Stock Exchange (BSE). Notably, the company has resisted the temptation to re-enter the highly competitive and cut-throat retail market in South Africa, having exited that market in 2020 due to sustained losses. Despite this, Choppies is the largest grocery retailer in Southern Africa, outside of South Africa. It has a footprint of 277 stores and is visited by about 2,5 million customers each week with footfall up 15,5% in the period.

The company reports in Botswana pula. The pula is worth R1.32 rands and has been very stable at these levels. In its latest financials for the six months to 31^st December 2024 the company reported retail sales up 19,3% and headline earnings per share (HEPS) up 32,7%. The majority of its stores are located in Botswana with 23 stores in Namibia and 38 in Zambia. During the six-month period it opened 26 new stores with 5 new stores in Namibia and 6 in Zambia.

Inside Botswana the company increased sales by 16% with like-for-like sales up 11,5%, volumes up 13% and selling price inflation of 3,7%. Namibia has sales growth of 51% with like-for-like growth of 21,6%. Profitability is expected to increase as the newly opened stores reach their full potential. Choppies Zambia saw sales rise by 12,4% in pula. The Zambian kwacha has declined 21% against the pula since December 2023 mainly due to the fall in the copper price in 2022 and recent drought conditions. The company closed its loss-making operations in Zimbabwe, in December 2024.

The tax rate in Botswana is expected to increase from 22% to 23,5% with effect from the June 2026 tax year. This still compares very favourably with South Africa’s 27% corporate tax level. VAT in Botswana at 14% is also lower than VAT in South Africa.

Technically, the Choppies share price has been in a strong upward trend since March 2025. Consider the chart:

As you can see, we added the share to the Winning Shares List (WSL) on 6^th March 2025 and it has risen by 87% since then. This means it is performing at just less than 200% per annum (194,95%) – which makes it the sixth best performing share on the Winning Shares List at the moment.

The company is growing its store footprint steadily and is sticking to profitable businesses while closing loss-making businesses. This is a winning strategy which should continue to benefit shareholders going forward. In the markets where its stores are located it has limited competition and that probably explains its reluctance to re-enter the South African market.

In our view, this is a share that will continue to perform well in the future. There are many other countries in Africa where it could expand its operations. Its stores in both Zambia and Namibia are performing well. There is also the possibility that one of the large retailers in South Africa could make an offer to buy Choppies out as an easier way to extend their footprint into Africa.

The company paid a dividend of 3.0 thebe (approximately 4 cents) per share for the year ending 30 June 2024, comprising an interim dividend of 1.6 thebe and a final dividend of 1.4 thebe. It is expected to publish its financials for the year ending 30 June 2025 in September 2025, with strong results anticipated.

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