Choppies Enterprises Limited’s profit from continuing operations fell 51% to P74 million for the year ended 30 June 2026, as rising costs, weaker consumer spending and pressure on margins offset growth in group sales.
The retailer reported revenue of P9.89 billion, up from P9.17 billion a year earlier, while retail sales increased 7.9% to P9.82 billion. However, the growth was driven by the opening of 27 new stores and inflation, with the group recording no volume growth and like-for-like sales declining 1.2%.
The weaker bottom line came as costs rose faster than gross profit. Gross profit increased 6.5% to P2.02 billion, but total expenses increased 12.1%, while the group’s gross profit margin narrowed to 20.5% from 20.8%. Choppies said the increase in costs reflected new stores and inflation.
Operating profit before interest fell 23.6% to P243 million from P318 million, while adjusted EBIT dropped 37.6% to P219 million from P351 million. The group attributed the decline to costs growing faster than gross profit in Pula terms.
The pressure was particularly evident in Botswana, which remains Choppies’ largest market by revenue. Botswana sales declined 0.7% to P5.62 billion, while like-for-like sales fell 1.2%. Volumes declined 5.5%, partly offset by 5.1% price inflation and the opening of seven new stores.
EBITDA and adjusted EBITDA in Botswana declined by 15.6% and 16.1%, respectively, as gross profit grew more slowly than costs. Choppies said the new stores opened over the past 12 months would need additional time to reach their full potential.
The company linked the difficult Botswana trading environment to reduced consumer liquidity following the diamond market slump, government austerity measures, higher fuel and transportation costs, an inflationary cost base and the implementation of the living wage. Promotional intensity in a constrained consumer market also weighed on profitability.
Outside Botswana, performance was mixed. Namibia recorded sales growth of 23.2%, or 14.9% on a like-for-like basis, but government subsidies on key food commodities squeezed sales value and margins. EBITDA declined 25%, while the segment’s EBIT loss widened to P20 million from P9 million.
Zambia delivered stronger sales growth, with sales increasing 42.6% in Pula terms and 15.1% in Kwacha terms. However, the appreciation of the Kwacha resulted in deflation across wholesale and retail operations, contributing an estimated ZMW29 million, equivalent to P18 million, loss for the segment. Adjusted EBIT consequently fell 78.9% in Pula terms.
Choppies also continued to face pressure from its hardware business. Losses in the segment increased from P19 million to P27 million, with management saying another 12 months would be required to turn the business around, including expanding into other countries where Choppies operates. Despite this, the broader “Rest of Choppies” segment, which includes milling, manufacturing and hardware, increased adjusted EBIT from P21 million to P28 million.
The decline in profitability was accompanied by a weaker headline earnings performance. Headline earnings attributable to owners fell to P74 million from P171 million, while headline earnings per share dropped to 4.1 thebe from 9.4 thebe.
Cash generation also weakened, with net cash generated from operating activities declining to P578 million from P679 million. The group invested P253 million during the year, while financing activities resulted in an outflow of P384 million. Cash and cash equivalents ended the year at a negative P2 million, compared with P85 million a year earlier.
Choppies said it increased non-IFRS 16 debt by P61 million to fund new stores, logistics and IT capital expenditure. At the same time, it settled in full the consortium debt raised in 2021 during January 2026. Inventory days improved from 33 to 30 days, while receivable days fell from five to four days.
The board has opted to retain earnings rather than declare a final dividend, citing the need to preserve liquidity for core operations and support the group’s growth plans. An interim dividend of 1.0 thebe was paid on 29 April 2026. The company said dividend declarations would resume as sustainable earnings growth and financial stabilisation are achieved.