Cash-flush Shoprite rewards shareholders with dividends
SHOPRITE shot up more than 10 percent on the JSE yesterday after the group said it was cash flush on the back of record sales, and rewarded shareholders handsomely with a nearly 40 percent dividend.
The continent’s largest food retailer said that its sales for the 52 weeks to June 28 increased by a bumper 6.4 percent to R156.86 billion, despite the Covid-19 lockdown restrictions.
Chief executive Pieter Engelbrecht said the group defied the restrictions in a challenging trading environment.
“Our core Supermarkets RSA operating segment increased sales by 8.7 percent, representing a R9.8bn increase to R122.4bn,” Engelbrecht said. “Our Supermarkets Non-RSA continuing operations’ sales declined by 1.4 percent in rand terms. However, it increased by 6.6 percent in constant currency terms.”
The group said its trading profit, excluding the impact of hyperinflation, increased 10.4 percent to R8.3bn, while diluted headline earnings per share rose 2.5 percent to 765.8 cents a share.
Cash-flush Shoprite declared a final dividend of 227c – up 39.26 percent from last year – to push its total payout to 383c during the current financial year.
The payout was 20.1 percent higher than the 319c declared a year earlier.
Shoprite’s core business, Supermarkets RSA, reported an 8.7 percent sales growth and 6.8 percent on a like-forlike basis.
The segment makes up 78 percent of its sales, with major trading banners such as Shoprite, Usave, Checkers, Checkers Hyper and LiquorShop.
Engelbrecht said that the South African supermarket business reported 2.3 percent volume growth, and 16 months of consecutive market share gains up to and including June.
However, Supermarkets Non-RSA’s continuing operations reported constant currency sales growth of 6.6 percent, with volumes down 2.1 percent.
The group said the segment experienced ongoing currency devaluations in certain key regions, particularly a 70.8 percent devaluation of the Ango
lan kwanza against the dollar.
In Kenya, Shoprite closed one store post year-end, and said it expected to dispose of its remaining two stores in the region in the year ahead.
The divestment from Kenya comes exactly a month after the group flagged that it was going to sell its stake in Nigeria.
Lulama Qongqo, an investment analyst at Mergence Investment Managers, said the numbers defied prevailing trading conditions.
“I think these numbers demonstrate good performance, especially taking into consideration that Shoprite is not firing on all cylinders as they are also affected by the same Covid-19 restrictions and costs that their competitors are experiencing,” Qongqo said.
Shoprite said the economic landscape was expected to remain challenging for the next 12 months.
“We have, however, demonstrated in the last 12 months that our businesses are well positioned to meet economic stress such as the Covid-19 pandemic. Given this fluid and unpredictable 2021 operating context, the group is focusing on the factors within its control, of which there are many,” the group said.
Shoprite shares closed 10.81 percent higher at R129 on the JSE yesterday.