Shoprite profit up as SA stores prove resilient

While SA’s economy is in a recession, the group remained resilient with growth in sales and market share.

Shoprite reported full-year earnings in line with analyst estimates as it boosted market share in SA ahead of a partial tie-up with clothing and furniture specialist Steinhoff International.

Heps rose 12% to R10.07 in the 12 months through June. The board declared a full-year dividend of R5.04 a share, up 12%. Shoprite expects “positive sales momentum to continue,” after revenue advanced 8.4%.

“We believe there is room for further growth as we continue to improve efficiencies and profitability both in South Africa and beyond the country’s borders,” CEO Pieter Engelbrecht said. While SA’s economy is in a recession, “the group remained resilient with growth in sales and market share.”

The earnings are the first to be reported by Shoprite since fellow retailer Steinhoff agreed to buy a 22.7% stake, as part of the planned listing of its African assets. This will be the first step by billionaire Christo Wiese, who chairs and is the largest shareholder in both companies, in combining his interests in the retail giants.

“We don’t see the synergies between food and furniture and more information is needed on these benefits,” Damon Buss, Electus Fund Managers analyst said. “We also have questions about the difference in strategy between the two companies, with Shoprite having seen more organic growth.”

The company’s been focused on capturing market share in three different tiers of customers, Charles Allen, an analyst at Bloomberg Intelligence, said.