Choppies , Botswana’s largest grocery retailer, is grappling with the impact of rising costs even as its stores bring in more customers. The company’s latest financial results for the six months ending December 31, 2024, paint a picture of a business expanding at full speed but struggling to convert its growth into higher profits.
Revenue surged nearly 20%, reaching P4.72 billion, thanks to new store openings and increasing demand. However, this growth came at a cost. Operating expenses climbed sharply, and the company took a financial hit from the sale of its struggling Zimbabwe operations. As a result, while Choppies recorded P115 million in profit from continuing operations, its total profit—including discontinued businesses—fell slightly to BWP 85 million, down from BWP 90 million a year earlier.
A Retail Giant Under Pressure
For years, Choppies has been aggressively expanding, adding stores across Botswana, Namibia, and Zambia. This strategy has helped the company maintain its position as a dominant player in the region. In just six months, it opened 26 new stores, boosting customer traffic and pushing total sales up by 19.3%.
But rapid expansion comes with challenges. The company’s expenses jumped 22.9%, driven by the costs of running new stores, inflation, and one-time losses. Choppies also had to contend with tighter margins, as increasing competition forced it to adjust pricing strategies, particularly in its home market of Botswana and its liquor retail division, Liquorama.
“The numbers show that we are growing, but they also highlight the pressures we face,” said CEO Ramachandran Ottapathu. “We are investing heavily in expansion, and while that puts short-term strain on our bottom line, we are positioning Choppies for long-term success.”
Expanding, But at a Cost
Choppies’ business model relies on scale, and the company is banking on new stores reaching profitability over time. Its core Botswana market remains strong, generating BWP 2.91 billion in sales—up 16% from the previous year. Namibia also stood out, with a staggering 51% increase in revenue, while Zambia continued to deliver solid growth despite currency challenges.
However, the retailer’s foray into Zimbabwe ended in disappointment. In December, Choppies sold its Zimbabwean stores at a loss of BWP 14 million, marking its exit from that market. While the sale helped the company refocus on its stronger segments, it was a reminder of the risks associated with expansion.
The Road Ahead
Despite the financial pressures, Choppies remains bullish on the future. The company has maintained a strong cash position, generating over BWP 300 million in operating cash flow, and declared an interim dividend of 1.6 thebe per share, reinforcing its commitment to shareholders.
But challenges remain. Global economic uncertainty, fluctuating exchange rates, and rising operational costs continue to put pressure on the retailer’s margins. As the company navigates these headwinds, its ability to balance expansion with cost control will be key to maintaining profitability.
For now, Choppies is betting on its growing store network and strong brand presence to keep it ahead of the competition. “We are focused on sustainable growth, ensuring that every store we open delivers value,” Ottapathu said. “The long game is what matters.”
Whether Choppies can turn its aggressive expansion into higher profits remains to be seen. But one thing is clear: the retailer isn’t slowing down anytime soon.