Shoprite Holdings has posted a 3.6% increase in group sales in the 12 months to 30 June, to R150.4 billion (€8.82 billion), however the group's non-South Africa based operations saw sales and profits slump due to 'rampant' inflation and regulatory issues.
The group said that its performance follows a 'transformational year' in 2018, with the second half of the year seeing a marked improvement; its South Africa business saw sales grow by 7.4% in the second half of the year, and by 9.4% in the final quarter alone.
'We believe that the market share gains reflected in the most recent quarter are testament to our core South African business being back to full operational strength,' the group said in a statement.
Group trading profit fell by 14.3% to R6.9 billion (€400 million), with its South African operations posting a trading profit of R5.9 billion (€350 million), a 9.1% decline year-on-year, and its non-South Africa operations posting a loss of R265 million (€21 million), a 141% decline year-on-year.
South Africa
The South Africa retail operation, which generates three quarters (74.9%) of the group's sales, posted a sales increase of 4.9% for the full year, to R112.7 billion.
Like-for-like growth in South Africa was 1.9% for the year, which was impacted by the rollout of a new ERP It system across the group, as well as industrial action at its Gauteng distribution centre earlier this year.
Its core Checkers banner saw turnover growth of 4.6% for the year, boosted by its focus on the mid- to upper-tier segment of the market, and the rollout of a new fresh proposition. The Shoprite banner saw sales rise by 3.5%, while Usave was up 0.8% and Liquorshop rose by 25.1%.
'Rampant Inflation'
However, the group's non-South Africa business, which includes operations in 14 African countries, saw sales decline by 7.7% to R21.3 billion.
It said that 'rampant inflation' in several operating countries, particularly Angola, has reduced spending power, as well as the group's ability to maintain gross margins, while it has also been hampered by an 'increasingly onerous' regulatory environment about the importation of products.
Currency fluctuations have also impacted the group, with the Zambian and Nigerian currencies seeing a 29.4% and 17.9% decline against the US dollar, respectively, in the past year.
'Across the 14 countries outside South Africa in which we operate, we estimate that internal food inflation averaged 3.3% for the current year', the group said.
'First-Half Challenges'
On its core South Africa business, Pieter Engelbrecht, the group's chief executive, said Shoprite posted a solid performance despite being "significantly impacted by our well documented first half challenges. With the strike in the DC behind us, our team worked tirelessly to restore performance in the second half. It is pleasing to report that we ended the year with our final quarter’s sales in Supermarkets RSA growing by 9.4%".
Outside of South Africa, he added, "Ongoing forex shortages, currency devaluations and the aftermath of rampant inflation in Angola and its ongoing impact on affordability took a further toll on our Non-RSA business. Supermarkets Non-RSA reported a trading loss of R265 million for the year.
"Despite no foreseen respite in short-term trading conditions in the region, we are committed to our customers in the 14 Non-RSA countries in which we operate."
The group opened a net 126 new stores in the 12 month period, down from the 154 it opened the previous year.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
