Shoprite Shares Slide as Full-Year S. Africa Sales Growth Slows
Shoprite Holdings Ltd. (SHP), South Africa’s largest food retailer, fell the most in two weeks as second-half sales slowed amid weaker consumer spending in its domestic market.
Total sales growth declined to 10.4 percent in the six months through June, compared with 13.8 percent in the previous half-year period, the Cape Town-based company said in a statement today.
“The growing pressure on consumers’ disposable income reflects in the slow-down in sales in the South African supermarket division,” Shoprite said. Full-year revenue growth at the domestic unit weakened to 9.8 percent compared with 12.9 percent for the same period a year ago.
South African retail-sales growth slowed to 1.9 percent in April, a six-month low, as slower economic growth and rising joblessness curbed consumer spending. The unemployment rate climbed to 25.2 percent in the first quarter from 24.9 percent in the previous three months, as the labor force expanded and the retail, finance and construction industries cut jobs.
Massmart Holdings Ltd. (MSM), the South African retailer controlled by Wal-Mart Stores Inc., also said July 9 that sales growth slowed during the first half of the year amid a downturn in consumer spending.
Shoprite shares fell as much as 4.3 percent to 182.99 rand, the biggest slide on an intraday basis since July 3, and traded down 4 percent as of 3:25 p.m. in Johannesburg. Massmart dropped 3.7 percent, while Woolworths Holdings Ltd., a food and clothing retailer, slid 3.3 percent.
Revenue from Shoprite’s operations outside its core South Africa market increased by 28 percent compared to the year earlier period, the company said.