With Steinhoff deal off, Shoprite is looking to expand outside Africa
SHOPRITE was looking to expand outside Africa in order to continue to grow, the retailer said yesterday as it released its results and following the collapse of merger talks with Steinhoff this week.
Shoprite shares gained 3.52 percent on the JSE yesterday to close at R194.62.
Chief executive Pieter Engelbrecht said: “We are also looking for opportunities in the developing world. We want to expand to the other markets other than Africa.
“To sustain our growth, we are constantly investigating the potential of new markets, not only in Africa, but also on other continents.”
The termination of negotiations between Steinhoff Inter- national and the Shoprite Holdings on Monday, which would have resulted in a formation of Retail Africa, has not discouraged the group.
“It was unfortunate that the shareholders couldn’t reach an agreement at the end, but we are happy with what Shoprite has achieved so far on its own,” said Engelbrecht.
Earnings
In the six months to end-December, the group’s total turnover increased by 14 percent to R71.3 billion, while its trading profit rose by 19.2 percent to R3.91bn.
Diluted headline earnings per share grew 15.5 percent to 460 cents a share. As a result the board declared an interim dividend of 180c a share, which was up by 15.4 percent as compared with 156c a share in 2015.
The group has opened 147 new stores during the past 12 months and by the end of December was trading from a total of 2 653 outlets, with just more than 1 200 of these being supermarkets.
“This enabled the group to provide an additional 7 144 people with jobs, proudly bringing its total staff complement to more than 143 000 as South Africa’s largest private sector employer,” the group said.
The non-South Africa division, which grew turnover by 32.3 percent to R12.88bn, performed well.
Of the 14 countries in which it trades outside the borders of South Africa, the performance in Angola and Nigeria was exceptional.
The group was able to overcome the foreign currency shortage in those countries and, unlike other traders, managed to keep shelves fully stocked.
The result was that consumers flocked to its stores leading to a constant currency sales increase in Angola of 155.4 percent and 60.1 percent in Nigeria.
“We are confident that these customers will remain loyal to us. So, when the availability of foreign currency in these countries improves, we should be able to maintain our momentum to a large extent,” said Engelbrecht.
The group’s core business, Supermarkets RSA, that generates almost 80 percent of its total supermarket sales, outshone its main competitors, raising turnover by 10.7 percent to R50.89bn and market share to 31.7 percent.
Jason Forssman, a fund manager at Ashburton Investments, said the retailer’s earnings were slightly better than what the market expected.