South Africa-based retailer Shoprite Group has posted a 0.1% decline in like-for-like sales in its financial year ending 1 July 2018, however the group's South Africa supermarket business saw a 1.9% increase in like-for-like sales.
Like-for-like supermarket sales in the group's other African territories were down 12.0%, with this figure adjusted to exclude the impact of hyperinflation in Angola.
Total group turnover was up 3.1% to R145.3 billion (€8.77 billion) in the 12 month period, which was driven by volume growth of 2.7% and a 3.3% increase in customer numbers. If Angolan hyperinflation is excluded, the group's turnover increased by 3.6%, the company said.
Trading profit was 1.4% lower at R8.0 billion, while the trading margin was 5.5%.
Domestic Operations
The group's South African supermarket operations, encompassing 1,610 and representing 74.0% of the group's sales, increased its turnover by 5.7% for the full period, despite overall market deflation.
"Our core South African supermarket operations increased turnover by 5.7% despite experiencing overall deflation in selling prices for six out of twelve months during the year," commented Shoprite chief executive Pieter Engelbrecht.
"Internal selling price inflation declined sharply from an average of 5.9% in the corresponding period to just 0.3% during the year under review, with 13,241 products in deflation at the end of June 2018. This is testimony to Shoprite’s commitment for almost 40 years to put customers first by keeping prices low."
Engelbrecht added that the group's strong South Africa performance, despite the low inflation in the market, saw the business increase its market share to 31.7% for the period, with its Checkers operation seeing a "more sharpened focus on higher income customers".
Regional Focus
Outside of South Africa, in the 14 countries across Africa and the Indian Ocean islands in which Shoprite operates, the group described its results as 'disappointing', adding that the Angolan operation, its biggest outside of South Africa, 'faced many headwinds'.
The Supermarkets Non-RSA division saw a 7.0% decrease in turnover in rand terms, hampered largely by currency exchange fluctuations, although the business did report that its Nigerian stores are showing growth in local currency, albeit at reduced margins.
It said that its imminent expansion into Kenya, meanwhile, 'provides an exciting opportunity and reflects [Shoprite's] ongoing commitment to the African continent, where it has a significant competitive advantage'.
The Coming Year
Looking ahead to the coming year, Shoprite said that it believes its key indicators remain 'strong', particularly given the group's decision to continue to invest in ways to drive market share from its existing operations, as well as new store openings.
“We made a deliberate decision in the face of many headwinds to maintain investment in our people and in new stores for the sustainable long-term health of the business, the benefits of which will be realised in the future,” said Engelbrecht.
“We continue to invest in our people and products and secure growth opportunities in South Africa and beyond for the long-term growth of the business and in order to serve our customers, communities, suppliers and shareholders.”
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
