Sunday, September 26, 2021

    South Africa’s Shoprite chalks up 20% annual profit rise

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    Naija247news Editorial Team
    Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

    Shoprite has binding offers for Uganda, Madagascar stores

    Hopes to conclude asset sales there during 2022 FY

    Sales rise as basket spend increases
    CEO now comfortable with remaining core African operations

    JOHANNESBURG, Sept 7 (Reuters) – South Africa’s largest grocery retailer Shoprite Holdings (SHPJ.J) delivered a 20.3% rise in annual earnings on Tuesday and said it hopes to sell its assets in Madagascar and Uganda this financial year.

    Grocery retailers were among those businesses that benefited from the early onset of COVID-19 pandemic lockdowns as people stockpiled essential goods.

    Demand has since returned to normal, the company said, with customer visits for the year ended July 4 declining by 3.8% in South Africa, which is by far Shoprite’s biggest market.

    However, the group said average basket spend increased by 13.6% thanks to the South African government’s COVID-19 grants, continued investment in fresh food and search for discounts.

    Shoprite, with more than 2,800 stores in 13 African countries, said annual headline earnings per share (HEPS) from continuing operations for the 53 weeks ended July 4 rose to 956.3 cents.

    Across the group, sales of merchandise from continuing operations rose by 8.1% to 168 billion rand ($11.77 billion) driven by stronger grocery sales in its South Africa business under the Shoprite, budget Usave and upmarket Checkers chains.

    Fewer liquor store closures as COVID-19 restrictions on alcohol sales were lifted also contributed to the overall sales performance, with continued bumper furniture sales driven by a home improvement trend.

    Supermarkets in operations elsewhere in Africa continued to operate in regions challenged by macroeconomic and constraints on consumer affordability, which have been exacerbated by the impact of COVID-19 restrictions and regulations.

    Notwithstanding these factors, constant currency sales from continuing operations increased by 6.8%. In rand terms, however, sales declined by 7.5% due to continued currency devaluation as well as the sale and closure of operations in Nigeria, Kenya, Madagascar and Uganda.

    The rest of Africa business has increased trading profit four-fold to 307 million rand, in line with management’s targets after struggling for years, Chief Executive Pieter Engelbrecht told investors.

    Last month Shoprite classified its operations in Uganda and Madagascar as discontinued after a review of its portfolio outside of South Africa, which has been marred by currency volatility and lower spending. It has five stores in Uganda and 10 in Madagascar.

    Shoprite Chief Financial Officer Anton de Bruyn said that the retailer has received binding offers for the two operations.

    “We’ve now reached the 10 core countries that are now remaining in the rest of Africa that we think are enough of a segment that can sustain profitability,” Engelbrecht said.

    ($1 = 14.2683 rand)

    Reporting by Nqobile Dludla; editing by Jason Neely and Alexander Smith

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