South Africa’s firm Mr Price pulls out of Nigeria, says country is volatile
South Africa’s firm Mr Price Group on Thursday announced that it is pulling out of Nigeria market due to weak economic growth, difficulties with repatriating funds and local procurement.
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 percent 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 perceent 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.
Analysts said the exit of the company from the country speaks to the difficulty being encountered by some foreign investors who want to repatriate their funds from Nigeria in recent time as the country’s forex reserves take a plunge in the wake of the sharp drop in global oil prices.
Investors backlog of foreign exchange demand is estimated at around $2 billion, but the Central Bank of Nigeria (CBN) says they have to wait for a while before they can get their funds out.
– With report from Reuters