Woolworths to Close Nigerian Stores
… on High Rental, Duty Costs
LAGOS – South African food and clothing retailer Woolworths Holdings Ltd. (WHL) plans to close its three stores in Nigeria because of high rental costs, duties and difficulties with its supply chain.
“When an investment no longer generates viable returns, difficult decisions have to be made to contain costs,” Chief Executive Officer Ian Moir said in an e-mailed statement. “The Woolworths clothing and general merchandise business in Nigeria has not been successful, despite several attempts to improve performance.”
The decision does not reflect a change in the retailer’s African strategy, Moir said. Woolworths, which has 59 stores in 11 African countries outside of its home market, would continue to expand on the continent, he said. Woolworths opened its first Nigerian stores last year as South African retailers have been battling increased competition and shrinking domestic consumer disposable incomes.
Woolworths may more than triple the proportion of sales it derives from other African countries within seven years as it taps a growing middle and upper class, Moir said in an interview last year.
The retailer, which sells international brands such as Country Road clothing and organic, free-range and specialty foods, posted a 27 percent increase in net income to 2.6 billion rand ($253 million) in the fiscal year through June.