Shoprite turnover increases in face of tough economy
EVEN though local market conditions worsened and South African consumers came under increased pressure, Shoprite Group on Monday reported a 10.2% rise in turnover for the three months to September.
The growth was better than in the quarter to June but slower compared to the increase of 15.6% in the first quarter of 2012, reflecting the deterioration of South Africa’s consumer environment in which disposable income growth is being squeezed and access to credit has tightened.
The group’s South African supermarket unit, Shoprite’s largest division, grew 8.3%, compared with 12.2% in the same period a year earlier.
Noah Capital Markets’ retail analyst Roger Tejwani said: “Certainly things are sluggish but they are taking market share. We saw the Pick n Pay numbers recently and they were growing their turnover at about 7.5% and Shoprite’s came in with just over 10%,” he said. Shoprite will open 46 new supermarkets before December 31.
“Domestically, Shoprite are trying to keep momentum up on space growth, there is a little bit of a space race going on. Its difficult for Pick n Pay … they are probably coming up against a lot of competition on sites, their space growth is lower and it makes it harder to try get their market share back,” Mr Tejwani said.
The company’s supermarkets outside South Africa increased turnover by 29.1% and in constant currency terms, by 15.6%, supported by the opening of 14 new food outlets since October 2013.
“The fact that the non-South African business is still showing a decent level of growth is encouraging,” Mr Tejwani said. Thirteen of the countries in which Shoprite operates have a higher growth rate than South Africa has.
At the company’s annual general meeting on Monday, chairman Christo Wiese said Pepkor Group, of which he is also chairman, was considering acquisitions in UK.
Mr Wiese said BHS, the chain of department stores owned by billionaire Philip Green, “may well be one that we end up looking at.” The Mail on Sunday reported that Mr Wiese had tasked former Asda Group CEO Andy Bond, to seek out potential UK acquisitions.
Separately, Shoprite, which is seeking to reverse the purchase of shares by mainly Zambian pension funds on the Lusaka Stock Exchange, will return to court on November 25, Lusaka High Court judge Flavia Chishimba said.
Shoprite is suing Zambian shareholders who bought the stock from 2003 to 2011, saying its local representative sold shares at a discount outside its mandate.