Shoprite books double-digit sales growth

As it continues to take market share from rivals
Shoprite is valued at about R145 billion on the Johannesburg Stock Exchange (JSE).
Nick Wilson
South Africa's largest retailer Shoprite on Tuesday flagged double-digit full-year sales growth across its core brands, but margins were under some pressure amid promotional activity and a R1.3 billion spend on diesel.

The group's shares lifted more than 1% in early trade, with analysts saying the retailer appears to be continuing to take market share from its rivals.

Shoprite, valued at about R145 billion on the JSE, said in an update its total sale of merchandise increased by 16.9% to about R215 billion in the year to 2 July, when it increased its stores by a net 340 to 3 324.

It was also able to raise selling prices by 10.1%, but warned its profit margin would be lower than last year, as it lowered prices to cash-strapped consumers during its second half.

The company's core South African supermarkets business reported a 17.8% increase in sales, or 10.3% on a like-for-like basis, for a division that contributes more than 80% of the group's sales.

Rivals

Checkers and Checkers Hyper were standouts with 18% sales growth, while its LiquorShop business delivered 30.8% growth. It’s Shoprite and Usave brands reported sales growth of 15.6%, while the group's furniture segment, which contributes 3.3% to group sales, reported 5.1% growth.

FNB portfolio manager Wayne McCurrie said Shoprite's update showed it was gaining market share from its competitors.

"Even on a like-for-like basis, even if exclude the new store opens and the selling price inflation, they are still extremely good numbers."

He believed the market would like the update, despite the warning about margin pressure due to its push for lower prices, as well as load shedding.

Casparus Treurnicht, portfolio manager and research analyst at Gryphon Asset Management, also said it was "fair to say that Shoprite is still taking market share from the other retailers".

"We are still waiting for the Woolworths food numbers but so far what we are seeing is that Shoprite is taking a bigger slice of a smaller pie, meaning consumers have significantly pulled back spending on groceries and when they do they go for the best price, which is generally perceived to be at Shoprite."

He said most retailers were growing at far less than Shoprite, although there also "seemed to be a very little slowdown at Shoprite in real terms".

"They are not untouched by the economic environment."-Fin24