Finweek English Edition

Stellar results

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Shoprite published its financial results for the 53 weeks ending 4 July on 7 September and they were outstandin­g. Revenue increased 8.1%, headline earnings per share (HEPS) came in 20.3% higher and the dividend was up 42%. This as the rest of Africa returned to a profit, adding R307m after only generating R2m in 2020 and a loss for the 2019 financial year. Their trading margin was 6.1%, which is the best I can find for any large food retailer in the world, with most very happy to hit a 3% trading margin. A note here: I usually use operating margin, which includes exchange rate gains or losses and profit on lease changes or cancellati­ons. It excludes “items of a capital nature”, which are impairment­s, and hyperinfla­tion losses in Angola, but retailers are all moving to trading margin as a key measure. Shoprite’s loyalty programme is now at 20m users and the Sixty60 delivery app has been downloaded 1.5m times. The group’s LiquorShop was closed for 144 of the trading days but still added 4.4% revenue growth. This stock is a cornerston­e of my portfolio and on a current price-to-earnings ratio (P/E) of around 20 times it is not cheap, albeit the dividend yield is at a decent 3%. Shoprite is never cheap and the results indicate why.

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