Africa’s largest grocery retail chain Shoprite has reported a 16.8% increase in group merchandise sales, raking in R106.3 billion for the 26 weeks ended 1 January 2023.
The retailer updated the market on its interim performance on Tuesday via SENS.
The sales performance this period was underpinned by the South African supermarket operations, which contributed 80.1% to the group’s performance. This segment of the group reported a 17.5% rise in merchandise sales to R85.1 billion.
The Checkers and Checkers Hyper chains posted a 16.9% rise in sales, while the Shoprite and Usave chains came in 15.1% stronger in sales growth.
“In an operating environment marred by chronic power outages throughout South Africa, sales growth of this magnitude can only be achieved with expert planning, exceptional teamwork and seamless execution on all fronts,” CEO Pieter Engelbrecht said.
Shoprite’s market share gains were attributed to healthy volume and customer growth as well as increased basket spend by its customers, 26 million of whom are Xtra Savings loyalty rewards card holders.
Load shedding blows
Despite the double-digit growth in sales across its retail store brands, Shoprite notes that persistent power cuts and the group’s efforts to protect consumers from price increases have eaten away at profits and shareholder returns.
The JSE-listed group’s gross margin declined by 64 basis points year-on-year to 23.5% this period.
Further, a total spend of R560 million on diesel for generators in the six months has resulted in trading profit only increasing by 8.6%, leaving the group’s trading margin at 5.7%, down from the 6.1% reported last period.
Diluted headline earnings per share increased by 10.2% to 577.5 cents, up from 524.1 cents in the previous period.
The interim dividend increased by 6.4% to 248 cents this period, up from 233 cents in the prior comparative period.
“We are disappointed that as a result of the diesel expense, to mitigate the impact of load-shedding during the period, we are not reporting the level of profit and dividend growth normally associated with such a notable achievement in terms of sales growth,” Engelbrecht said.
“The ongoing cost to our economy in terms of growth and investment is devastating, as is the impact on the everyday lives of South Africans, most of whom are already dealing with considerable hardship,” he added.-moneyweb
