Shoprite sales in healthy growth

SHOPRITE, Africa’s biggest retailer, yesterday posted sales growth of 7.8 percent for the six months to December 2017 in its South African supermarkets as internal inflation declined to 0.4 percent, underscoring the resilience of the business despite the country’s sluggish economic prospects.

In the corresponding six months, the Cape Town headquartered group’s sales had grown by 7.4 percent through the reduction of basic commodity prices.

Shoprite said group turnover was 6.3 percent higher for the six months to December, down from a strong 14 percent turnover growth during the corresponding six months in the prior year and overall internal price deflation that occurred in the last quarter.

The furniture division was a star performer, with increased sales of 10.8 percent, while other operating segments, mainly driven by the OK franchise division’s performance, saw a growth of 6.7 percent, the company said. “This is pleasing, given low internal price inflation and in line with the group’s South Africa supermarket performance,” said Shoprite, which operates 2 689 outlets in 15 countries.

Good business Dexter Mahachi, a research analyst at Momentum, said the numbers reflected the global and domestic economic environment. “Overall Shoprite remains a good business. With the domestic economy expected to grow by 0.7 percent, how many businesses are managing to get a 7 percent sales growth?” asked Mahachi.

Mahachi also said Shoprite had reduced internal inflation to 0.4 percent through strong operational management and sales promotions that were also boosting sales. “They are squeezing their suppliers. They are also automating many of their functions. There is little they can do but have sales promotions to stimulate consumer demand,” Mahachi said.

South African consumers are under pressure and the unemployment of almost 28 percent has made the environment more difficult. Shoprite’s operational numbers come a day after Woolworths said that revenue had increased by 2.5 percent in the 26-week period ending December 24.

Shoprite shares gained 3.29 percent on the JSE yesterday to close at R220.